Economics

July 28, 2018

The problem of income inequality is mostly a problem of crowding out working class and middle class people. In other words, it's a cultural idea with economic consequences. The primary problem with the cultural idea is that we have adopted the "Lifestyles of the Rich and Famous" as the appropriate arc for the common man.

Look how everyone wants their phone to be smarter and AIs to deliver them from hard work. How they expect words to be as worthwhile as deeds. What America needs to do is to culturally reject the life of bling, and replace that with a work ethic that includes much respect.

Eating the rich is poking a hornet's nest. It cannot work without a revolution. I repeat. It cannot work without a revolution. Americans are going to have to accept that it's not just the Koch Brothers, but Beyonce, Tom Hanks, Bruno Mars, Drew Brees and LeBron James that they'd have to eat.

What people also need is the focus of attention for their basic needs. That means high quality items need to last. It means I should be able to buy a $400 refrigerator that lasts 10 years. Rugged dependable basic durable goods. It means that I should have no problem whatsoever finding a safe neighborhood if I can only afford $600/mo rent for a 1BR.

I grew up in an era where people regularly said "We were poor but we didn't know we were poor." That's cultural. It's because we had arcs of our lives that didn't depend on the ultra-rich. Those people did not control the things we needed and wanted in life. Then again we didn't expect ski trips to Colorado, or $300 wristwatches. But we also didn't have the monopolies that we have today.

I say the biggest problem is that Americans are oriented towards the blingiest and the blingiest is owned by monopolists. Look at something as simple as eyeglasses. It will scare the pants off you.

I think there is also an impoverishment of thought that gives us the idea that our problem is income inequality and the solution is wealth transfer. Look at what I select as priorities for the Cobb Left, and maybe you can catch my drift.

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It is reasonable for people to question curiosity, because curiosity is just another avenue for monetization. I think we need to look at the beast we created with the MBA, the concept that any single-minded hustler can take any idea whatsoever, from pet rock to college coed rating service and turn it into a million or a billion dollars. As long as we keep alive the idea that you can follow your passion and will be economically rewarded, we give license to the common man to abandon the discipline of the practical, and approval for Shark Tank overlords to dangle dollars just above our heads. These are not free markets, these are lottery mechanisms. And yes we have lotteries too.

Our culture has promulgated the illusion that wealth, in and of itself, is evidence of an immoral scam. That is because of an unwillingness to remove the idea of profit from the realm of vice. Too many people believe that profit is prima facie evidence of coercion, that wealth and the abuse of power always go hand in hand. This is what justifies the idea that tearing down all the wealthy to benefit the poor is always a good idea. But not only is it fighting fire with fire, it undermines the cause of structuring society's working classes to attain a moral profit. That is what gets dictatorial powers to those who will lynch capitalists, merely because they are capitalists, and destroys the ability to raise new moral capitalists in the mainstream.

Putting oneself in the shoes of the poor does not mean that suddenly I should hate the wealthy or the talented. We cannot ever afford to steal the profits of people who are not themselves thieves. There is but one morality and it has to do with fairness, in never doing to others what you would not have done to you.

When society believes that wealth and profit are always immoral, we make the talented who attain wealth through profit fear the revenge of society, even as society benefits from their productivity. This is evident in what we lament as income inequality. The rich want to live away from the rest. They are seen as a different kind of human. Whose responsibility is it to teach otherwise? It is everyone's responsibility. Because when a society decides to steal on behalf of the 'noble' desires of the poor to live like the rich, well I think Hayek best called it the road to serfdom.

There is one good life for all men. It is determined by liberty. Liberty cannot be bought with cash. It must be a common value in all of society. Liberty does not abide theft. So let us bring thieves to heel. The presence of wealth is not evidence of a crime.

November 04, 2017

Somebody asked a question about HashFlare, which is a website that promises to mine Bitcoin for you, for a small fee. I took the time and worked out some of the economics of Bitcoin mining. I think it will be very instructive:

Q. How much money do I need to invest if I want to make 3 bitcoins a day by investing in a cloud mining platform like Hash Flare?

A. Uh. You can’t afford it.

In January 2016, 1TH/s would get you 0.004 BTC per day. If you wanted 3.0 BTC / day you would need 750 TH/s of compute power.

The Antminer S9 costs $2000 each and delivers 14 TH/s of performance. Therefore you would need a rack of 54 of them. Each Antminer S9 draws 1600W of power. So at 10cents per KWh, each Antminer S9 is going to cost $3.84 per day x 54 = $207.36 of electricity per day.

So if I’m HashFlare and I’m leasing the ability to mine 3.0 BTC/day my capital cost is 54 x 2000 = 108,000. But let’s say I get a discount and can get a bulk order of Antminers S9s at 10% off. (Fat chance, but let’s assume it.)

97,200 financed at 5% interest over 3 years works out to about 2915.00 per month. Plus electricity cost of about 6225.00 per month. That’s a 3 year cost of approximately 329,040. Let’s round that out to be $330,000 bucks.

So if I’m HashFlare, I’m going to mark that up a whole lot to cover my costs. Let’s see how much.

So let’s look at the SHA-256 Plan.

That plan says $1.50 per month gets you 10 GH/s. So $150 per month will get you 1 TH/s and therefore $2100 per month will get you one month of 1 Antminer S9 performance, and you don’t pay for electricity. Still, you need 54 of those to mine 3 BTC per day. Therefore you’d have to pay $113,400 per month to Hash Flare. That sounds about right.

Now 3 BTC/day at a steady $4000 per Bitcoin gets you $12,000 per day. In a month that’s $360,000. That would give you a net profit of almost a quarter million dollars per month. Here’s the problem. HashFlare is not going to give you that price unless you lock it in for a year. Which means you have to promise them a 1.36 million dollar contract per year.

See the problem here? If you can afford to spend $1.36 million per year to pay Hash Flare, why wouldn’t you just buy the hardware and electricity yourself for $330,000 over three years?

Well of course you wouldn’t. You’d be in the same business as HashFlare making 4.08 million over 3 years on costs of $330,000. And guess what? That’s a bigger profit than you’d make mining BTC. HashFlare would make 12x investment on you no matter what the price of BTC is. You would make 3x profit depending on the price of BTC. Meaning HashFlare only needs your business for 1 month to cover their investment. Oh but wait, you’ve signed up for a year. Quit early and I bet you pay a fee.

Now the big curve ball is that now you see it’s a much better business model to be in the HashFlare business than to mine BTC yourself. But then you’d have to compete with HashFlare. And the more people who get into the HashFlare business (and the pure mining business) the more the demand for Antiminer S9s goes, and the the more net hashing power there is in the world to mine BTC. So the cost of Antminer S9s goes up, and the net ability for 14 TH/s to actually mine 0.004BTC goes down.

September 18, 2017

I'm listening to the grinding sound of FUD over cryptocurrencies. It's annoying me to no end. I'd just like to review a few things I've heard in the past from the technically illiterate in consideration of the future of information technology.

They said software would always and only be used by scientists for science, or by engineers for engineering but that business managers would never have computers on their desks. They said that only businesses would never use UNIX and that IBM would put all of those other guys out of business. They said that TCP/IP was never going to replace Banyan Vines in businesses. They said that AS/400 was an unbeatable operating system for business and that peer to peer networking wasn't necessary. They said that Token Ring was superior to Ethernet and would win in the marketplace.

They said that Triple DES was as secure as cryptography could get and that anything more secure than that could never be in the public domain. They said that MP3s and file sharing was only for piracy. They said the music industry would never go along with something like MP3s. They said that the taxes applied to the sales of blank CDs would satisfy the artists and labels to makeup for money lost to piracy. They said that the addition of digital music would shrink the entire market. They said podcasts wouldn't matter and could never compete with content on broadcast TV.

They said that AOL / TimeWarner would be the industry leader and determine the future of content delivery on the internet. They said the Steve Case was the most brilliant businessman who understood IT. They said that nobody would be able to solve the last mile problem of fiber to the home. They said broadcast TV would last forever. They said nobody in the mainstream would ever buy $2500 computers. They said nobody would sell personal computers to the public on credit. They said Scientific Atlanta was the only company that could win the settop box wars. They said there could be no possible business model that would satisfy the major studios and convince them to put their best properties online.

They said ecommerce was doomed because nobody would trust putting their credit card information online. They said that travel agents were here to stay because websites could never be sophisticated enough to handle airlines, hotels or car rental agencies. They said money lost in the dot com bubble proved bricks would always beat clicks. They said all of Silicon Valley was like Pets.com.

They said that the digital divide was permanent and there was actually no good reason for black Americans to go online. They said that nobody would get news from online and that online advertising was not enough to sustain any real business model. They said bloggers could never influence real opinion. They said that Presidential campaigns didn't need to pay attention to 'netroots'. They said people who sat in front of terminals to write onto the internet couldn't be taken seriously, that it was all virtual and had no impact on real life.

They said nobody would buy books online. Then they said nobody would buy shoes online. Then they said nobody would buy clothes online. Then they said nobody would buy groceries online. They said nobody would file their taxes online. They said nobody would pay bills online. They said nobody would buy cars online. They said nobody would rent apartments online. They said nobody would buy and sell securities online. They said nobody would contribute to charities online.

They said Blockbuster was not threatened by online upstarts. They said Microsoft couldn't build a gaming console. They said the Blackberry was the business phone. They said Nokia could never be threatened by Apple. They said people would never watch video and movies on their phones. They said there was no use for wireless internet connectivity. They said wifi was only for the elite, not ordinary people. They said there would never be wifi on commercial airliners. They said a free operating system could not beat Microsoft Windows. They said separating the browser from Windows would kill Microsoft. They said applications run on browsers would never replace fat clients.

They said open source software could not beat proprietary software. They said databases on mainframes would never be threatened by decentralized databases. They said no serious business could be run without a bricks address. They said ordinary people would not need or want 64bit computers. They said videogames could never make as much money as movies. They said tablets were ridiculous and nobody would have a tablet and a phone. They said Facebook was just for teens. They said Twitter was just for teens. They said online dating was just a fad. They said proprietary software was more secure than open source software.

So is a single bitcoin worth $500,000, $5,000, $500 or $0? I’m inclined to say $0, especially if bitcoin’s value depends on it being adopted as a global digital currency to replace dollars. There is no chance whatsoever that bitcoin can displace the dollar, for the simple reason that it is badly designed. Bitcoin can handle a pathetically small number of transactions, and uses an inordinate amount of electricity to do so, making it entirely unsuitable to replace ordinary money.

Even if bitcoin worked better, it is in a Catch-22 because of Gresham’s law, the nostrum that bad money drives out good. Given the choice of spending inflationary government-issued money or something which holds its value, everyone would spend the bad paper stuff and hoard the bitcoin. You wouldn’t want to be the person who spent 10,000 bitcoins on two pizzas in 2010, when a bitcoin was worth a fraction of a cent. Those bitcoins are now worth $40 million. But if no one spends bitcoin, it will never get established as a currency.

Bitcoin's value depends upon the genius of its invention and the conviction of those engineers and investors who understand that and their willingness to build upon its technology. Same as any other invention. The world will make room for it because it works better than the alternatives. The genie is out of the bottle. It will be adapted and perfected. It is inevitable. Why? Because the idea is entirely too massive to be ignored, just like open source software. Except digital currency is even bigger. It's bigger than junk bonds in the 80s. It's bigger than rural electrification in the 30s. It's about as big as double entry accounting. That's how deep this is going to go. I guarantee you.

But there's basically one conspiracy, and that is to keep Coinbase as the only exchange in the US with access to a bank account. I can't imagine there will be no other bank to take on that challenge, but I can imagine people at the SEC being whispered to.

August 08, 2017

I haven't read it. I'm probably not going to. That's because my interest in gender balance in the computer industry is low. I care about the software, not the people. Ironically (or perhaps not), this is what makes me a computer geek, and I can testify that for most of my life it has cost me socially. Everybody knows the stereotype of computer geeks. If you don't, then watch the video. The point I'm making is just that small and it should come as no surprise to anyone. Except for that fragment of the population who has extraordinary admiration and hopes for Google as a model of our society, which I happen to think is one weird fragment kissing another weird fragment's butt.

In the news this morning, I read that Rockwell, which is now called Rockwell Collins (since when?), is the object of a takeover bid of around $20 billion. A lot of us keep forgetting about those big businesses that don't listen to our every word, and sell ourselves back to ourselves. In Google news, the GoogleManifesto, some essay written by a dude named James Damore, is all over the place. Evidently it went viral within the company and then I read about it first on Quillette and tweeted it out Monday. I'm generally attracted to articles that get actual scientists to comment, which is rare all over the net. Quillette is the bomb anyway and on my RSS. Right now Quillette is either getting DDOSed or slashdotted. Good for them. Fortunately, I have my own Evernote copy of the article in question.

So my basic and abiding interest is how computer systems add or detract from the ability of humans to make decisions. In fact, that's my career. So I find it rather disturbing that systems can be abused, then again, some people are just poor decision makers no matter what facts may lay at their feet. So my new favorite quote, from Game of Thrones, is "I trust an honest man's eyes more than I trust what everybody knows." And here, Damore is vindicated by Quillette's experts.

This is the core of my support of Quillette's article:

Here, I just want to take a step back from the memo controversy, to highlight a paradox at the heart of the ‘equality and diversity’ dogma that dominates American corporate life. The memo didn’t address this paradox directly, but I think it’s implicit in the author’s critique of Google’s diversity programs. This dogma relies on two core assumptions:

The human sexes and races have exactly the same minds, with precisely identical distributions of traits, aptitudes, interests, and motivations; therefore, any inequalities of outcome in hiring and promotion must be due to systemic sexism and racism;

The human sexes and races have such radically different minds, backgrounds, perspectives, and insights, that companies must increase their demographic diversity in order to be competitive; any lack of demographic diversity must be due to short-sighted management that favors groupthink.

The obvious problem is that these two core assumptions are diametrically opposed.

Since I've tweeted out soundbites, I need to be here to catch flack downwind of the hot air spewing right now. Let's see what happens.

If this is an Affirmative Action discussion, then the simple fact is this: 18% of computer science degrees go to women. If Google wants 'parity', then 18% should be their target. If Google wants 'equality' then they're going to have to make some controversial discriminations. I am convinced that there is a demand within the non-bell curve of Silicon-Valley-Americans that far outstrips the supply of qualified women. So the mechanics of creating equality is bound to create a very bumpy playing field, despite all rhetoric to the contrary. Balanced workforce does not produce the kind of tokens people want. Well it very well may create outsized tokens, but that's not what I see as a proper pursuit. Either way, the office politics of such companies I find to be rather twisted. You and I both know that people would figuratively kill to land a job at Google. So I cannot imagine that they don't figuratively kill for promotions inside Google.

I tend to believe that too many people have bullshit jobs, and that of the responsible industries, IT has done less than it should in insuring that productivity goes up. There has been and continues to be more bullshit, which is now often embedded in bullshit processes abetted by bullshit software. But I'm just a cranky old bastard who has been programming since 1974. What do I know? I know I very rarely work with female peers. But my cranky gripe has more to do with what millennials get away with in startups and the thrash that causes. On the whole and in the long run, more than half the industry is still running Windows. See? We're not all getting better software. The industry is generating masturbatory systems. But I'm sure that's not the tangent people embroiled in this controversy wish to discuss. Well, let them come here and discuss it. I can't guess.

My point is that Google itself (not Alphabet) crowdsources all of its value. Google is valuable to the masses because it caters to the masses. When it comes to evolutionary biology, the masses don't get it. They don't care to get it, and they want what they want despite what the experts say. If Google is decidedly democratic (or wishes to present such an image) then it must pretend to aspire for a democratic definition of equality in its workforce, because that is what the masses will want to hear. Thus the dilemma. I think Damore will sue. I think Damore will win. I think there will be more pussy hat parades of disgust.

June 29, 2017

I want you to imagine that all the cotton ever produced in the USA was produced by slave labor. Imagine further that every bit of cotton clothing in the USA came from this domestic product. That would mean that everyone who buys cotton clothing is funding the industry based on slave labor, and there is no way out of it. So who wears cotton?

This dilemma requires a choice between infinite regress vs fungibility. And the answer is fungibility. Society cannot function without fungibility, and this should be fairly obvious given a little thought. I don’t have the patience to explain, I think this example with Bitcoin(!) does an excellent job.

Instead of currency, think of what some people are trying to do in judging the action of every criminal and racist in American history and trying to recast the moral integrity of every person living today according to infinite regress of sins or victim status of their ancestors. That is what a lot of foolish Americans are trying to do. Every day.

But we have something called the Fifth Amendment. It goes a little something like this:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

We also have something called the Bible. In the book of Ezekiel, it goes a little something like this:

But suppose he has a child who sees all the sins that his father committed. He becomes alarmed and doesn’t do them. 15 He doesn’t eat on the mountains or pay attention to the idols of the house of Israel. He doesn’t defile his neighbor’s wife.16 He doesn’t cheat anyone, either by seizing collateral for loans or committing robbery. He gives his food to the hungry and clothes to the naked. 17 He refrains from oppressing the poor by taking neither interest nor profit. He observes my case laws and follows my regulations. He won’t die because of his father’s guilt. He will surely live. 18 As for his father: If he exploited the weak or committed robbery, or did anything else that wasn’t good for the people, he will die because of his own guilt.

19 You will say, “Why doesn’t the child bear his parent’s guilt?” The child has acted justly and responsibly. The child kept all my regulations and observed them. The child will surely live. 20 Only the one who sins will die. A child won’t bear a parent’s guilt, and a parent won’t bear a child’s guilt. Those who do right will be declared innocent, and the wicked will be declared guilty.

So I have given you three different ways of understanding that sin, crime, immoral behavior does not pass down from generation to generation, from individual to individual, from group to group. No society would work if complaints not only had no statute of limitations but could be arbitrarily placed on the head of someone who didn’t perpetrate the offense. But you and I know, every day people are trying to establish exactly that condition.

We have a consumer economy funding a lot of crap retail of Americans in the 'middle class' who buy a lot of crap with their disposable income. All that's going on here is that the disposable income is drying up and Americans are going to have to stop buying crap. All the crap stores are going out of business because Americans are stopping being crap consumers. This means that American garages won't be piled up with crap and can actually be used to park two cars, because nobody's going to be able to afford three.

The mall is going away. So what? We will stop buying SUVs and minivans and filling them up with crap from the big crap filled malls. Instead, we'll shop online and UPS and FedEx will have the large vehicles. It will all be more efficient anyway.

Same thing with crap junk food. Suddenly, when you have a choice between potatoes and Hot Pockets, you won't spend crap money on crap food. Same thing with designer clothes, $200 sunglasses, and all those crap products that pretend to be tools, like Swiffer. WTF is a Swiffer but a disposable mop. What? It's the old razorblade trick and 'middle class' Americans are thinking they are getting their kitchen floor "3x cleaner"! Yeah right. Broom. Mop. Duster. Buy once keep for 5 years. Simple. That's the way the American economy will shrink. People will start to think twice about expensive non-necessary crap and not buy it. The wave of the future is smart, durable goods. No more kitchen remodeling. No more drive mowers. No more craft beer. No more $75 sandals. No more George Foreman grills. No more designer vacuum cleaners. No more disposable income for disposable consumer goods. NO MORE HIPSTERS!

June 21, 2017

The advance and spread of cryptocurrencies requires ‘perfected’ security. It will do for identity what GPS did for location. People in the cryptocurrency economy will always be on the grid, so to speak. They will be absolutely, positively identifiable in a global, distributed web.

A public distributed blockchain is a perfect history. It will answer the question at the top of mind of every investigation. Who did what and when.

I have no doubt that a new class of individuals will arise who understand these things and will consequently make every effort to safeguard their anonymity. These will be the people who have the ability and/or connections to read and understand computer code. The rest of us will take our chances. Just as today there are people who have been able to take advantage of PGP, the overwhelming majority of people are plagued by spam.

The spam of the future will be much more insidious, and seductive.

I see the great opportunity for cryptocurrencies to be able to monetize attention in new ways. It’s rather the keystone of a post-modern economic order. Those of us who grew up with Walter Cronkite and three network TV stations have seen, dare I say, the devolution of authority inherent in there now being >2000 channels of television. Social media has expanded that to the very ends of cognition.

However all of these have been limited by the fairly narrow regimes of capitalization. Imagine, therefore a world in which social capital becomes actually fungible. I like to give the example of the rise of video games. I started out with pinball in the 70s, listening to the Eagles. Then through the age of Pac Man, then Mortal Combat in arcades. Next Counterstrike and now World of Warcraft, Call of Duty, et al in the living room. My kids grew up watching me play. They didn’t touch the controllers, they watched my gaming as if it were TV programming. Popular gamers developed a network called Twitch, it grew to 55 million gamers and Amazon bought it for a billion dollars. A network of people watching other people play videogames. The Book of the Month Club never had it so good.

Thousands of new sources of capital will create many new currencies, which will fund business models that will seem outrageous by today’s standards.

We will enter the era of populist attention capitalism and banking.

Both of these developments will have profound implications for the social order. I cannot seem to manage my speculations but they seem to all land around this conclusion.

I expect that the rise of crypto in all of our lives will lead us to be hyper-tribal. They will change our systems of trust radically. I think nationalism is under attack, and I think cities will become the new centers of power as national currencies weaken. Multicultural ethics will entrench. Who writes books will be more important than ever (if people still read and write, rather than watch and listen) Who funds armies will be more important than ever. As a stoic, I must be dour. Sorry.

I’ll focus on the negative because I think people will ultimately decide for themselves if it is appropriate in the long term to get hope from government cheese.

The strength and consequent weakness of our consumer economy is that somebody somewhere is always always always thinking of something new and exciting. They sell this idea to capitalists, who decide, Shark Tank style, whether or not the masses should get a taste. The thing to understand is that the business community in the US is coming up with new business models faster than any other entity in society. I don’t think even music.. well I guess the perfect example IS music. New musicians make money all the time. There is no way anybody can predict what kind of musician it is most profitable to be. By the time you learn to sing, somebody has come up with autotune and singing is so 2010…

The net effect is that you can only hope to educate yourself quick enough to be employed by the newest industries and business models if you go to the hottest schools. People who go to ordinary schools pick a major where they figure they will be able to get a job at a good company that has been doing X for a longer time. If you can’t get a college education you have to pick a business that’s been around for maybe 50–100 years. If you get no education and pick welfare, well then you’re in the same category as peasants from 400 years ago. Even illiterates can pick grapes for a living, and there’s competition of those jobs too.

So income inequality continues as long as new ideas and new markets emerge, and the lower you are on the educational chain, the lower standard of living you have to accept.

But at least there’s hope.

You don’t get thrown in jail just for defaulting on a loan. We don’t have debtors prisons in America. There’s disability insurance which is part of the welfare state. So if you mess up your back, you can collect on that. But I’m thinking you’re asking more about stuff like WIC and EBT cards. I know very little about that, personally.

I believe that it’s fundamentally wrong to let people fail, but it is also fundamentally necessary. You cannot force people to succeed. If I believe you are going to get a worthless job, I have an obligation to tell you about a better one. If I believe you are going to be on welfare, I have an obligation to try to persuade you away from that dependence. If I believe your weed smoking is a crutch, then I have an obligation to sober you up. But but BUT BUT all of these are just *social* obligations, not *moral* obligations.

Being poor is not a crime. I have no moral obligation to prevent you from being poor, like I have a moral obligation to stop a violent attack in progress.

If you learn anything from this, understand that this is the difference between justice and ‘social justice’. ‘Social justice’ is not actually a moral obligation, it’s just something you do to improve your social status. Justice itself is a moral obligation. That is why we craft laws and establish institutions to execute those laws. That’s why certain offenses are merely socially unacceptable and other offenses are crimes.

Since it is not a crime to be poor, you can even help people stay poor. That’s what dependence does, and in some ways that’s what the welfare state does. It creates dependence on a set of exchanges that are some of the slowest moving business models ever. Milk money for babies. That’s as basic as it gets, and rather sad because after all, a well-fed woman could nurse her child for free.

I cannot tell you the value of hope in the various forms of the welfare state, but I’m pretty sure that’s the best thing that comes out of it. It would never be enough for me.

September 25, 2016

Vanity Fair published a whole bunch of statistics about blacks and police. So people think they are doing a lot of thinking about the subject. So here is my simple question. Can you identify racial bias?

I don't want to be too clever here, because I see a very simple way out of this descent into statistical madness, which is to avoid statistical morality in the first place. But when we think about 'racist white cops' and 'unarmed black men' we've already stepped into a pile.

Here's the problem put as simply as I can put it. The racism of 'racist white cops' is not the same as the racism of the KKK. Furthermore the 'profile' of black males is not the same across America. This is a logical assertion that cannot be proven or disproven by statistics, and that is because nobody really disambiguates the racial culpability of the victims, nor of the virulence of the racism of the perpetrators. So the inherent problem is that 'racial bias' could be criminal, or it could be offensive.

Why are black women not the target of racist white cops? If white racist cops were really out to get black people, wouldn't there be a lot more accusations like those made by Al Sharpton similar to that about Tawana Brawley? Is our press missing that, or is the racism of 'racist white cops' only directed at a certain specific kind of black male? What about the culpability of black males? If Barack Obama says 'I am Trayvon Martin', does he become that? Well if you were a KKK member, it wouldn't really matter what Barack Obama says, he's the same as any other black, male or female, ie worthy of being lynched.

This paper explores racial differences in police use of force. On non-lethal uses of force, blacks and Hispanics are more than fifty percent more likely to experience some form of force in interactions with police. Adding controls that account for important context and civilian behavior reduces, but cannot fully explain, these disparities. On the most extreme use of force – officerinvolved shootings – we find no racial differences in either the raw data or when contextual factors are taken into account. We argue that the patterns in the data are consistent with a model in which police officers are utility maximizers, a fraction of which have a preference for discrimination, who incur relatively high expected costs of officer-involved shootings.

His critic, Justin Feldman makes an excellent point that both criticizes Fryer and ultimately, everybody else:

Economic theory aside, there is an even more fundamental problem with the Houston police shooting analysis. In a typical study, a researcher will start with a previously defined population where each individual is at risk of a particular outcome. For instance, a population of drivers stopped by police can have one of two outcomes: they can be arrested, or they can be sent on their way. Instead of following this standard approach, Fryer constructs a fictitious population of people who are shot by police and people who are arrested. The problem here is that these two groups (those shot and those arrested) are, in all likelihood, systematically different from one another in ways that cannot be controlled for statistically (UPenn Professor Uri Simonsohn expands on this point here). Fryer acknowledges this limitation in a brief footnote, but understates just how problematic it is. Properly interpreted, the actual result from Fryer’s analysis is that the racial disparity in arrest rates is larger than the racial disparity in police shootings. This is an unsurprising finding, and proves neither a lack of bias nor a lack of systematic discrimination.

Yes, but what about the people who are black Americans who are neither arrested, nor shot? In this case, the entire fiction is that race is the proximate cause for all these matters and that the race of black Americans has a problem. Sure, if you find those who arrested and shot and young and black and male and numbering about 500 deaths per year to be representative of black America. The contradiction makes itself patently obvious when it is argued, in support of the rhetorical call that 'Black Lives Matter', that 'black on black crime' cannot be considered in the same context. There is no such thing as 'black on black crime', which is not some denial of the racial identity of perpetrators and victims, but a firm assertion that outside of those immediately responsible, this is not a satisfactory representation of black America. And of course it is not. Black America is not under threat from 'black on black crime'. But they are even less under threat from 'white racist cops'.

So does racial bias exist? Of course it does. Is it all of our concern? No. And that is what nobody wants to admit. We have decided that 'racist white cops' represent. We have decided that 'unarmed black men' represent. This is the state of race relations today in America. You and I know it's pathetic and wrong. Oh, by the way, same thing with Muslims. I lay blame at the foot of multiculturalists because this representational slight of hand only serves their agenda to have a balkanized American identity drive so much of our discussions about society.

June 30, 2015

Bungie wields a dual-edged sword by sponsoring its community of crackhead gamers for the crack that is Destiny. Recently, one of the designers of the newest announce release 'The Taken King' has said that they have created player emotes that are so cool that people 'would throw money at the screen' to have them. The big controversy is that with what is essentially 'Destiny 2', the people at Bungie have got the nerve to make an all new Collector's Edition for 80 bucks which includes all the content from 'Destiny 1'.

Since I game with many Destiny primadonnas I heard grief about this last week. It reminded me of a couple things.

First of all, prior to this, I think the biggest controversy by the dainty whiners in the Bungie forums, (who go out of their way to describe how they're actually still in love with Bungie (like co-dependent lovers)) was the idea that Bungie had included 'Dark Below' maps in the original game. IE, Bungie is trying to ripoff their players by forcing them to pay for content they had already downloaded. Evidently some players had managed to obsessively glitch their way into areas of the game that had yet to be populated or completed. So the speculation was that 'huge' areas of content were already in place and that Bungie was cheesing development so they could just 'flip a switch' and charge more money for work that had already been completed.

I stopped going to Bungie's forums after this kind of crappy complaint became common. So it is actually possible that people still complain about that while I pay it no mind. As far as I knew, the release of the Dark Below showed that only one room was used in that next release. Obviously I didn't even pay attention to the glitchers. If you have the patience to watch 10 minutes of that video, then maybe you fall into my category of dainty. Bungie explained of course that as important as art direction is, the skyboxes and levels/rooms are the simplest pieces to add. The difficult work is in spawning the enemies and making everything a game instead of just an empty room you walk through.

The second thing I note on this matter is something I've understood for a while in my studies of Taleb. That is the matter of affording to make mistakes. When we hate on rich people, it's generally because they are powerful and stupid. How can one be powerful and stupid at the same time? Simple. When you are rich, you can afford to make mistakes. Related to this matter is whether or not money buys happiness. Well, if you make a lot of mistakes and you don't have money, you'll be more upset at your losses. Think of the expression "There's an hour that I'll never get back."

So consequently, the people who are likely to complain most bitterly over the features of Destiny 2, or anything for that matter, are those whose bang for buck satisfaction level requirement is very high. Which is an interestingly different take on the term 'high maintenance' which we generally ascribe to more affluent people.

I've spent well over 1000 hours in Destiny since September and I'm perfectly satisfied that the 80 bucks or whatever I paid for it is money well spent. In fact, I think about that almost all the time when I have free time. Downloading a two hour movie for 10 bucks is a complete waste of money to me, whereas I would easily spend $100 a year to play Destiny.

--

I should add that as a gamer, my style is that of a completionist, and I also appreciate that which I appreciate. In other words, I am very happy taking my time to complete every aspect of a game. I'm never in a hurry to be first. Many of the Destiny gripers want more, more more, and then blast through the content to maximize their player levels, then complain that there is nothing new to do. Yes it's a grind to maximize as soon as possible and then boring to do everything else once you've reached the highest level. That's something of a jaded personality trait, if you ask me. Like the man who does everything possible to get the Wall Street job and half million dollar compensation package before the age of 30 and then calls the rest of the nation 'flyover country'.

One rather hopes that high stakes players remain at the high stakes tables, or that they can actually be commensurately happy playing penny ante games with the common man.

January 29, 2015

I just skimmed through a story about bluefin tuna. Apparently, we are about to run out. But yet it's everywhere. It makes me think about what might be a fatal flaw in our form of capitalism, and raises the following question.

What if supply and demand is a function of capacity but capacity is not a function of supply and demand?

Or think of it this way, what if you built a water well powered by a machine that was driven by a huge flywheel that took you 2 years to spin up. As you start pumping the water you deliver more and more to your thirsty customers who drink their fill. After two years, you are pumping as fast as the machine can go, and at this point your business is mature. Supply and demand are now pretty much about in balance. Basically, you have exploited the economy of scale of your massive machine. You serve a million people five million gallons a day and your pricing is low because of the sunk costs you've already paid for. Now you are in a prime capitalist position. Price the water as you please, but mostly to increase demand, pump out profits and keep your customers loyal. You sell subscriptions, you give discounts, you offer trials for new customers. It's all about marketing now. I would basically say this point is the maturity of the overwhelming majority of markets for consumer goods and commodities. They are machines.

Then you notice that the water supply is getting lower, in fact, you have about one year of actual supply left. If you slow down the flywheel, you'll have to lay off people, and that kind of disruption will start to kill your economies of scale. Your unit production costs will go up and you'll kill your margins. So what do you do?

I am guessing that in most industries, businesses keep up the demand pricing rather than supply pricing, and then figure out an exit strategy with fungible cash. Which is to say, you sell sell sell your product until the well runs dry. Then you crash the business and cash out. In other words, you are captive to the 'will' of the machine you have created which doesn't care about whether or not its resource is limited. It's job is to produce, not to conserve. When you run the mining equipment, or the farming equipment at anything less than full capacity, you're wasting money and will lose your customers.

In the case of a global shortage, this is dangerous. You will run at full capacity until you hit the wall, because it's too difficult to downscale the business, raise the prices, and retain the appropriate market share.

What if it's chocolate? What would people not pay for chocolate? The price elasticity for chocolate (whoops, now I'm going to make technical mistakes - beware) is negative. It might even be a Giffen good. In other words, you want it so badly that no matter what Hershey's charges, you're going to pay. With regard to the supply going tits up, Starbucks coffee drinkers will drink all of South America's coffee plants bare. There will never be a point at which gasoline costs too much for us to not empty all the wells. We will eat all of the bluefin tuna sushi until there is no more in the sea, and the businesses between us and the raw materials of the earth will spin their flywheels until the whole enterprise crumbles. In other words, people will watch Robin Williams tell jokes until the day he dies, even if show business is killing him. And the day before his last show, there will be no indication by the price of the ticket that it is the very last ticket.

Consumers won't know, because whatever it is, they can afford it. And then it's a ghost town.

January 09, 2015

Somebody asked questions the other day about why America.. whoa here we go.. was too stupid to adapt the metric system like Europe. Well the obvious conventional wisdom is that we're stupid and have bad habits. But let's think about that for a moment.

Let's start with a yard. Not your yard, a yardstick. But your yard could be measured with a yardstick just as easily as it could be measured with a meter stick. Why? Because we know what a yard is and we know what a meter is and we know arithmetic.

Let's say your yard is rather large, like mine. It would then be 50 feet by 40 feet = 2000 square feet. Now there's something very nice about feet that we know, because feet divide into 12 inches. 12 is a special number because you can easily divide it in halves, thirds and quarters, and that is what you generally do with land. Yards are conveniently 3 feet. 36 can be divided very nicely too. But when you look at 360, then you get something that's rather strikingly brilliant.

360 can be divided by 2,3,4,5,6,8,9,10,12,15,18 and 20. That's rather clever don't you think? You can't do that with decimals so easily, and after all the point of any system is not that things can be measured. After all we could invent meters and re-invent them to be any arbitrary length and do the arithmetic. The strength of the metric system lies in its ability to scale by orders of magnitude. But scaling by orders of magnitude is not something that happens very often in the human scale. In engineering, sure. But not in home construction, food recipes, human measurement or any other of a dozen activities (hmm dozen) that we are regularly involved in. Now we could go into all of the ways we measure all of the things we do from miles per hour to paper sizes, but that long long discussion actually gets to the heart of Metric vs Imperial. In short, however, this is all about fractions. Or if you like to be mathematical about it, it's about superior highly composite numbers.

Now a friend told me that there are two kinds of engineers in the world. The kind that have put a man on the moon, and the kind that use the metric system. The picture above is taken from his machine shop. It sounds like braggadocio until you listen for another minute. Then the man says 'SAE'. Now anybody who's turned a wrench in their lives knows something about SAE sockets vs Metric sockets. But if you look at what SAE actually was and is, things get very interesting.

Check out this dude Kettering. I don't know about you, but to me that's a career full of wowsers. 186 patents is no accident. He helped build GM into the world's largest company. But what's fascinating, as when I listen enough, is to learn how many parts in the world's market for parts are of SAE measure rather than of metric. I often think in terms of meters nowadays, but only for things that are linear. I will always think of pies when I have to divide, and I will think of fractions. But isn't it interesting, just looking at the picture, which is a better, simpler, faster way to measure?

Maybe the metric system is why we haven't put another man on the moon.

Now I'm going to show the other side here, because what we've done in America which is metric to the bone before just about every other nation is in our currency. More than just about anything, currency lies in the realm of Extremistan. Orders of magnitude are quite proper here. But at the small level of the ordinary consumer, we don't do much with pricing that accords to common 360 sense.

For example. In old money there were 12 pence to the shilling. That would be quite nice if you purchased many things by the dozen. If a dozen eggs cost a shilling, a half dozen eggs would be sixpence. A smart shopkeeper would try to price such things that way for the convenience of his customers. Then again, one might be a bit too clever (by half?) using the same system to obfuscate, as bakers may have throwing in for their extra sized dozen. We certainly don't price things logically at the farmer's market level, but clearly decimal pricing let's us see unit prices reflect economies of scale in bulk pricing. So for things that scale orders of magnitude, decimal is better.

October 10, 2014

As an adjunct to my Peasant Theory, I need to flesh out a couple things that are brought to mind by the phrases 'It's a big country' & 'It's a free country'. These items mostly arise was I get rather disspirited by clumsy comparisons between the US and various socialist Scandinavian nations. They also arise when, as is popular now in Quora, people talk about the experiences of recent immigrants dealing with the reality of America as contrasted with all of the myths they've heard all of their lives prior to coming here.

On the first note, it immediately comes to mind that the examples of Denmark or Sweden make very little sense because Sweden is Sweden and its history is not arbitrarily swappable with that of the US. You can't hope to evolve one nation on the basis of an abstraction of another country's history. Sweden will never have it's George Washington, just as America will never have its Cromwell, nor will Canada have its Idi Amin. I'm not suggesting much in favor of a Great Man Theory, but this is a quick way to illustrate that political developments are not fungible commodities. Everyone in hindsight sees that al-Maliki in Iraq provided no Jacksonian Democracy for that nation. My point is, that which is possible (absent tyranny) is only possible due to the particular and transient confluences of political power. You cannot cut and paste policy from state to state.

Scandinavian countries are not good benchmarks for America. I'm not sure that they are for Europe either, but they always lie at the up end of some hockey stick of arbitrary predictors of the good life. In their socialist way, I suppose such things are predictable like cost of living increases mandated by the state, but they are also relatively small countries. Their isn't a lot of dynamism at work in those places. I tend to think of them as partial demographics. That is to say, anything you can say about Finland, you can say about any particular American suburb or university. It's small and isolated enough to be artificial.

It's that last item, small enough to be artificial, that keeps this in mind. There is a kind of social inertia which grows in correlation to the number of people involved in a single system. The US has many systems because we're more deeply embedded with independence and individualism as values. Small states can't afford that - for them it would be far too chaotic. And I see that this has implications in immigration policy - a smaller state would have a more difficult time without assimilationist policy, but 15 million new Americans is not going to turn this country on its head. Perhaps if they all went to South Dakota, but that's not what happens.

Americans disperse and they go to their own ground. If you want to live in Watts, CA, you know what to expect. If you want to live in Billings Montana, you expect something different, and it will be different in Indianapolis and Miami. It's a free country. Find your place.

I think it is the second note that is illuminating to everyone. People have found their place in America, lots of people in lots of places. And while there can be said to be some regular pattern to the waves and generations of ethnic majorities in various Brooklyn neighborhoods over the years, the Irish will have done it differently than the Jews. The American mainstream becomes less meaningful culturally, but the core of American values becomes more important as the proliferation of laws becomes more insidious. We have a Constitution and that core is critical, even as we absorb more and more diversity. It must be a core of law, you see.

It is this core, the Constitution, serving as a benchmark of Western Civilization, that must resonate. I am confident that it does, because within the broad inertial society of the Peasants, the Slice and the Ruling Class, that which is Constitutional is very well established and very well funded. Few people expect that which most needs doing to keep America strong is in fact, unconstitutional. We are interestingly diverse and divided and even awkwardly and stupidly divisive at times. But we Americans are not fundamentally perverse. We go with the Constitutional flow.

That flow is not going Progressive or Socialist or Fascist or any more than 10 points from the center. Within that core is an iron center, a hardcore America. And whether or not we admit it or take it for granted, that's not moving. It will be there and remain attractive because it is aligned with our best understanding of ourselves - an understanding that is sufficiently profound to withstand the ambitions of the world's wealthiest and most powerful institutions which seek out and defend the shelter that the American Constitution affords.

In the coming inflation, this will be tested. And even in decline and remission, the core of America will remain.

June 21, 2014

This is an interesting and unintended consequence of the impulse behind Marxism and the end of the British Empire. Bear with me, it gets really good.

Once upon a time in the early 20th century, before the days of baked beans in a can, the English were starving, literally starving to death and living in pitiful conditions. Around that same time a second industrial revolution was afoot. Think of the world just after rail lines crossed countries and steel mills were being built, but before Henry Ford's factories were all finished. Well smart people started seeing multimillionaire industrialists and starving coal miners and put two and two together. Something's got to change, they thought. We have the ability to use tractors and increase farm production. Nobody needs to starve in this world.

Now these same people, especially with their very clear understanding of the class system and how many Pounds Sterling any man needs to live a civilized life figured that these starving miners, if they only organized and got a 30 pound raise per year, could live very healthy, non-starving lives. That's because in those days, everybody all over the planet could live like a proper British gentleman for 200 pounds a year. Just read David Copperfield if you have a spare month- the whole thing is a rags to riches story.

Then again the difference between rags and riches back in those days was not so much. All the starving miners needed to do was organize once, strike once, get their one time raise and let all the new industrialized technology like telephones and light bulbs and automobiles and industrialized farming and assembly lines and big hydroelectic dams... well, you get the picture. The future was at hand. If your were starving, all you had to do was join the revolution, all you had to lose was your hunger. The means of production would be shifted from the millionaires (who were an easily identifyable precious few) to the masses. This was called scientific socialism. It was all about progress. It was a very compelling argument.

Fast forward a short 40 years and you're in the 50s. No longer are there just a few millionaires controlling Ford and Bethlehem Steel, but there are thousands of millionaires building commercial passenger jet planes, air conditioners, radios, cars, cars that look like jet planes and have radios and air-conditioners. It was all very Tomorrowland - all very kitchen of the future. Not only did the workers get their 30 pounds raise, they got supermarkets and Kodak cameras and station wagons and TV and movies and rock & roll on the radio, thanks to the clever millionaires who kept building neat-o products in the post-war era. But what did the workers have to do? Well, not much, except go to college, because all this new work was on new things that never existed before and it was complicated. You needed to understand electricity, and that's not intuitive like smelling a bean to tell if it's rotten. Once upon a time, you mined coal with a pick and a shovel. Now you have to operate the big diesel electric coal mining machines. Not so back breaking, a little bit more mentally demanding, but with union pay and benefits.

Well if you were a coal miner's daughter, and you saw a jet plane, you got all kinds of crazy ideas that maybe you could make a million dollars and leave that old smelly town where your grandparents nearly starved to death. All you needed was a few more skills and a few more years of school. What you didn't need was to know how to wash dishes. There's dishwashers for that. You didn't need to know how to can beans for the winter. Beans come in a can at the supermarket. You didn't need to know how to sew or knit. Clothes in your size could be bought off the rack. Well, hell you were a modern woman, or a modern man. You didn't need any of those small town rural skills. Thats for bohunks and retards and low-skill immigrants fresh off the boat. Not you, brother. So you packed your bags and left for the big city.

Technology is supposed to make life easier. Well, if you were a college president in 1920, you had a secretary. Why? Because you were smart enough and important enough to deserve one. And you had a cook. Why? Because you didn't have time to cook yourself. And you had a driver? Why.. just because. You were occupied with higher ideas, like how to build the run the university that trained the engineers that designed the transmission on the tractor that harvested 10 million bushels of beans coming in cans to a store near you. Nobody cared about putting bean farmers out of work. This is Tomorrowland, bean farmers used to starve! They've been spared that fate by the technology of the modern world!

What works for a university president doesn't work for you Mr. Bean Farmer. However, you're a greedy human just like the coal miner's daughter and you want more than just to not starve. You want to fly a jet to Hawaii. You want to play electric guitar. You want a telephone that bounces signals off of satellites not only for you but for everyone in your family. You want everything the university president has, and you call that modern middle class life. You want a car that doesn't pollute. You want teeth whitener. You want shoes that make you look like Michael Jordan. You want fancy clothes made out of anything but fur, and you want to shop for them not just for the season, but whenever you feel like it. You want all that technology that makes your life easy because you're going to study Java programming in the big city and go to California and build a website that's going to get a zillion hits. And people call you a geek and you're alienated from society because you don't know how to cook, or sew, or knit or bake beans and can them for the winter. In fact, you don't know beans at all. But you don't have time for beans because you're competing in modern society and modern society doesn't have time or respect for bean farmers and coal miners. After all, doesn't coal pollute? Yeah. It's not green. And you're too sophisticated for all that manual labor and all that shit shoveling. You barely have enough time to finish all your education and get a proper professional job in this modern society. Heaven forbid you have to take care of a child before you turn 30.

Now there are other unintended consequences of all this running uphill and competing. You actually do know how to be a millionaire. You're just about as well informed as Henry Ford ever was or could be. You're obviously not Henry Ford or Elon Musk, but you understand and live by the same rules. You and millions of other ex-bean farmers. Here's what you forgot.

Technology is supposed to make life easier, and save you time when you are living like the university professor, when you are running the marathon, when you are building the website, when you are actually working 60 and 70 hours a week. But it's not supposed to make your life easier when you are working a bullshit job. You only have to work 40 hours a week, that *is* easy. If you are the clerk at Joe's Rent a Car and you can't sew, or knit, or bake or fix your own light switches, or repair your own car, or deliver your own babies, what is it saving you from? You're spending all of your money just to fix the broken transmission on the car you drive to work. You're spending all your money just to pay for the electricity and internet and cable bills just to take an online course so you can make more money. And since you have weekends off, you spend more money to help you forget that you have a bullshit job. And you keep raising the bridge and never lowering the river, because you can't respect farming beans.

How many years would it take you to learn how to build a house? How many years would it take you to then purchase the materials and start building that house? You don't know because you don't think about it. You just want to go to college and get a job that pays enough so you can afford a mortgage for a house in a good suburban neighborhood where you won't really know your neighbors. What technology makes you think about that and solves that problem?

Technology for the common man was perfected 60 or 70 years ago. Everything since then has been for university presidents and rich people who fly in jets on the regular. There's no new technology that is more enabling. It's all just marginal improvements and fashion conceits. All you ever need were Levi's. You needed to learn algebra. You needed to read and understand Shakespeare and the basic laws in your small town. You needed to learn how to use a needle and thread, a hammer and sickle, a mortar and pestle, and pots and pans. You needed to learn how to take care of your own basic needs - food, clothing and shelter.

But now look at you. You don't even know if cheese is good for you, or how to make it. You're just waiting for the next survey to tell you if you should eat gluten - not that you could identify gluten under a microscope. Don't worry somebody on NPR will explain it to you, with pop music between the paragraphs just to keep your attention. Technology is not going to make your life easier. Technology is going to make the engine in your car too complicated for you to fix. Technology is going to make the parts of your television beyond your capacity to understand. Technology is going to take you on a wild goose chase away from common sense just to the brink of where it appears to be magic. Magic like how to wash clothes, and how to wash dishes and how to rake leaves and how to write a letter. How do you plan a meal for 4? How do you tell time? How do you get eggs?

We are not dumbing down. We were always dumb. We were so dumb that we were starving when left to our own dumb devices. Most of mankind is dumb. We are not university presidents. But some of us used to know how to grow beans. Those who didn't starved and died. Looking at starvation and death used to focus minds. But then some bright people said, all they need is a 30 pound raise... and they gave it to us. And for the most part, we didn't learn anything since then, 100 years ago. We didn't learn anything but how to watch TV, and listen to the radio. And we forgot how to live without them and our minds are completely unfocused. We didn't take over the means of production. That would have required focus. Most everybody who tried it failed. So we lucked out with the entrepreneurial millionaires.

But the millionaires figured it out one day that we weren't getting any smarter, and we couldn't make rockets that went to the moon, and we didn't care about algebra and Shakespeare other than for the college requirement. Very few people replaced the very few entrepreneurial millionaires. Nobody's mind was focused by starvation, but focused on getting the new house and new car. And the millionaires said forget it. It's not fun any longer to build stuff that helps people like it used to be, lets focus on our mansions and our yachts. Nobody gets excited about designing tractor transmissions. Now it's more about marketing the beans than growing them - maybe getting some marketing genius to write a book about the Bean Diet. That'll get some traction. Who wants to be an actual entrepreneurial millionaire? No, people just want to be corporate execs, you know, fitting inside the corporation with a well-paying bullshit job. Heaven forbid you have to come up with the ideas, design and build the product, balance the books, work the factory floor and answer the phones for customer service. No that went out with the days when people's good names and reputations were all the marketing they needed. Millionaires are mostly assholes nowadays. Except for doctors. But were doctors ever supposed to be millionaires? Oh wait, they got MRI technology and we bought that. It's Medical Practitioners LLC.

Technology is a a sleight of hand. People keep paying short attention and all they see is magic. They're sold on the whole idea that technology is an infinitely deep hat out of which we can keep pulling economic rabbits so that the dumb won't starve.

February 11, 2014

I don't quite understand why people have difficulty with the existence of the Federal Reserve. I suspect it's because they are navel gazing. After all, the Federal Reserve doesn't exist in the vaccuum of the USA, but as a powerful institution within the global economy. I suspect that they express a sense of powerlessness because they can't vote somebody else's money into a direction favorable to themselves or their perceived self-interest. I believe that a lot of Americans have been convinced that their voices are more important than they actually are. They are hearing the siren call of aggregation.

In the meanwhile, it is surprising that they don't do local banking when they could. I am involved in some banking business myself, and I am discovering that many small banks have been held hostage to old technology. One of my customers is one such bank and I was surprised to learn last week that they still use RPG. All that aside, my book says think networked, act locally.

Why doesn't America have a Savings & Loans industry? Well because it was mismanaged it into the ground. The history of the Resolution Trust Corporation is something I will get into. Banking has always been interesting to me since I was a teen, so it's rather fascinating to me that this corporation sold off a third of a trillion dollars of assets. That's rather amazing.

OK So here's what makes sense to me.

1. Specialty Brokerage & Hedge FundsPrivate banking and wheel of fortune for the Leisure Class, titans of industry & global capitalists. Step right up, get your tickets. No Limits. Minimal regulation. If the best minds on the planet can't keep the criminals out, tough boogers.

2. Investment Brokerage401K, IRAs, and standard investments. I would look at firms like Edward Jones and bring back companies like Brown & Company. Conventional wisdom investment with some safeguards for the small businessman and net worth < 10 million.

3. Global BanksInternational finance. Want to build an island resort, an oil platform, an airport, a railroad, a coal mine? These are your guys. Keeps America competitive and use that dollar. Chase. Citi. Wells Fargo.

4. Interstate & Business BanksThink Washington Mutual, before it imploded, PNC, Wachovia, Bank of America 15 years ago. Good sized healthy business banks. 50 of these would serve us just fine.

5. Savings & LoansNo more Countrywide. Local home loans, certificates of deposit, 529s, New Tax deferred savings instruments etc. This is the new nest-egg banking where risks are minimized and savings are encouraged. No interstate business.

February 10, 2014

If you can understand this phenomenon, then you can understand income inequality. You may not like income or wealth inequality, but you will begin to understand it. You also may not like the reason for it, that's because you are responsible for it.

What is Kool Aid? What is a Band-Aid? What is a Xerox machine? What are Kleenex? These are all household names in America. They are marketed brands that have become so popular that their very name 'describes' what they are. Kool Aid is a flavored drink mix. A Band-Aid is a bandage. A Xerox machine is a photocopier and Kleenex are facial tissues. But even if you have none of these specific brands in your home, if you use Wylers, Curad, Canon or Puffs products, you still know the names. Even after their actual market share has declined, you still know them for their market victories.

I want you to imagine that you are going shopping. Think of everything you put on your shopping list. As a matter of fact, the next time you go shopping try this experiment. Rank everything on your shopping list in price order from lowest to highest, and now imagine you are doing it for a whole month's worth of groceries. Make a big list, a list that includes just about everything in your refrigerator and cabinets right now. What brand of milk do you buy? Do you always buy the same brand? What about bacon? What about cereal? When you buy meat, do you buy the same cuts? What about beer?

Now lets go in another direction. How about clothes? Your underwear. What brand? Have you changed it recently? Laundry detergent? What about your washing machine? Who did you make rich when you bought that? Is it the same brand as your dryer? They don't have to be the same company, you know. Any washer will work with any dryer, but chances are you decided to make the same company richer than to spread the wealth around.

OK your car. Do you buy gas at the same gas station? You can mix gasolines. Do you? What about tires? It would probably be inconvenient for you to have gone to a different college for each of your years, but you could have spread that wealth around. You could have gone to a college nobody ever heard of and learned exactly the same. Chances are that if you got a B in Calculus at Harvard, you would have gotten the same B at Oklahoma State. Calculus is calculus, right?

Why do you choose what you choose? Two reasons. Because you have a choice and because the results are satisfactory. It stands to reason that the less you care, the more likely you will just go with the flow and send your money to something familiar and popular. If you are not brand loyal, you are likely to buy what's popular. OK think potato chips. If you don't care, you'll probably by Lays. Most Americans do. Even if you've never eaten one, you are very likely to know they exist. And the smaller brands are not likely to get your notice. But a potato chip is a potato chip, right?

These are well-known phenomena, market share and mind share. So how likely is it that you could invert market share? What about mind share? Well, think about what's funny. You laugh all the time, right? Videos about cats or babies can make you laugh. How about a video of a British baby biting his big brother's finger? Ah. That one is special. It can't get unfamous. Who is the funniest comedian? You can't undo their acts or their movies. Imagine how much work it would take for you to create a comedy phenomenon that would make people forget Charlie Chapman ever existed. What would it take to erase the memory of Marlboro in the world of cigarettes. Erase Shakespeare from English literature? It cannot be done. You'd need an alternative universe.

Human beings are social animals, creatures of habit. We learn lessons and we have long memories. If we were goldfish, then our lives would not have these long tail phonemena. What if our memories were only 3 months long? What would be our favorite movie? We wouldn't have loyalties and we wouldn't be drawn to anything popular. We wouldn't teach our children what we know. We would be random and more evenly distributed. No experience would be any more satisfying than any other. But we are not goldfish. The idea of us never kissing the same person twice until we have equally distributed our love is revolting to us. You cannot rid human beings of their evolution. Evolution takes a long time. That is why evolution is sustainable. It builds on what already is, it makes what is most bulletproof, most popular.

The inequality of wealth is a reflection of human nature. We stick to what works. We value loyalty. We cannot erase our memory. When something particular gets popular, it stays popular (market share) and if it get famous (mind share) beyond a tipping point, it become synonymous with what it typifies. Even when a Cadillac is no longer the 'Cadillac' of automobiles, we still know what that means, and it will go down in history that way.

October 02, 2013

Many people who argue about income inequality tend to think about money as if it were something that fell into a normal distribution,, ie bell curve. So they are upset by the very idea that with money, the few have more than the many. So the idea of an 'optimum level of income inequality' represents to them, a bell curve distribution. What they don't recognize is that redistribution of this sort goes against the fundamental way that money is supposed to work.

A simple way to understand is to think of the way that investments and insurances have non-linear payoffs. IE when you model monetary systems like investments and insurance on natural phenomena, you want it to be non-linear because nature is not.

For example. You would not be able to have healthcare insurance cover cancer treatments unless your monetary system can have non-linear payoffs. Which is to say if 1000 people pay $100/year for cancer insurance you use *leverage* based on your estimate that only 2 or 3 of those people will actually get cancer in that year, knowing that cancer treatment costs $20,000. If the 6th person gets cancer in a year, the $20,000 breaks the insurance policy and now that single 1 person destroys cancer insurance for 1000 people. That's the non-linearity of money. There is not a bell curve distribution of insurance benefits. It is the <1% of actual cancer patients who get the huge value of $20,000 payouts for their $100 investment.

If you try to force cancer insurance into a bell curve distribution where everybody gets some payoff, you entirely defeat the purpose of cancer insurance.

June 27, 2013

You know the old saying about giving a man a fish. When I look back at my debts of gratitude towards the Leftists that made my welfare their business, I try to distinguish that which was useful and inspirational from that which was by turns condescending, phlegmatic and authoritarian. The Left gave me a fish and told they could teach me how to fish, but that I'd never compete with the rich white fishermen in Beverly Hills. I went next door to Beverly Hills and figured it out myself. Now I build some of the best fishing line in the world.

As I have arrived at a fairly useful and comfortable place, mostly by my own doing and the vagueries of chance, it's easy for me to dismiss the Left. But I have been seriously considering exactly what the proper appeals are for Socialist Project upon humanity despite its obvious need for altruism.

To that end, I have put some George Orwell and Franz Kafka on my future menu, but these and other ingredients are on a slow burning back burner. Here's today's piece.

I am intrigued by something I received, unbidden, from the 78th Assembly seat holder about her efforts to cede some acreage onto public land which includes the remains of some 1400 year old aboriginal settlement. And I find it ironic that this government entity would find it useful to include this with pride. Of course one understands the bourgeios sentiment associated with giving propers to pre-European cultures here on the North American continent, but exactly how this translates into *empowerment* of Hispanics and Latinos is literally vague. Although how it will rhetorically be used by La Raza is as plain as day, depending upon the corporate face of contestants for the land within the aegis of the 78th. To wit, Walmart bad, cultural center good.

Included in my thoughts about this are some stunning revalations about the unread sections of the new Immigration Bill, somewhere within the machinations of our Congress. According to this legislative analyst with her partisan fealties the greatest deception of the Bill is that it transfers billions of dollars out of the funding of government bureacracies into a new estate of community organizations. Let's allow that to percolate a moment. The new Immigration Bill funds billions of dollars of community organizations, as opposed to government bureacracies.

Now unless one is so naive as to think that all community organizations are created equal, I'd like you to take a guess as to which community leaders are likely to be funded. Without failing to note the unusual scrutiny placed by the IRS on Tea Parties of late, I would summarize my opposition to this heinous idea in two parts. 1). The Civil Service is non-partisan and subject to strict regulations. Community organizations are not. 2). This is transparently an attempt to get the Federal Government into the business of the heretofore private business of astroturfing.

I should also mention in passing that I am not surprised, now having watched 'The Andromeda Strain' for the first time, that under the Obama Administration we find more coming under the purveiw of the Centers for Disease Control. I believe that Obama's scientism finds its practical way to power by defining more American liberties as threats to health. The properly funded CDC study will show how the number of bullets in Texas correlate scientifically with x morbidity, and thus the goverment, in the interests of health, uses incontravertible medical evidence to execute gun control.

If we owe people fresh to the Post-War American standard of living something through the arms of altruist government largesse, isn't it a high paying job? What I learned in economics was that America has a minimum wage so that jobs are harder to come by, but also more permanent. That if we dropped the minimum wage, more people would have more part-time work with lower benefits. What is the precarious balance? Well as the post-war prosperity has found no new industries with low-hanging economic fruit we've seen both, a rising minimum wage, rising unemployment and rising fractions of part-time low benefit jobs. Nobody wants to take a whack at redefining Exempt from Non-Exempt do they? I didn't think so. So the job situation is what it is, structurally speaking.

But what if you're a community organizer, or an activist volunteer? Has anyone ever heard of what level of civil service exam you have to pass.. oh wait. There's nothing like that. You just need too much time on your hands and no real job. Show up and they put you to work, with no pay. Until the Immigration Bill passes. Or maybe there's another law in the future that puts billions of federal dollars into the hands of useful community organizers or the proper sort. It does solve a lot of problems doesn't it?

I suspect that this sort of make-work will function at the level of say Congressional appropriations. It's another kind of Affirmative Action, which is to say it fulfills our obligations to people on the outside by getting them on the inside. That is, until somebody not beholden to that system gets into office and decides that taxpayer money should go somewhere else. The institutionalization of community organizations funded through partisan legislation is a brilliant maneuver for everyone except the class of flunkies it pays the minimum wage. But if your view of society is that we need community organizations driven by political expedience and not businesses driven by markets, then your vote matters as much as my dollar. For now.

April 02, 2013

I'm about to spread the meme around with a conservative and libertarian stamp of approval. Since the idea is expressed in terms of expresso, I expect that even Liberals and especially Progressives will instantly understand it. What they may not understand is why conservatives and libertarians would support such a scheme. The answer is simple, it cuts out the middleman of government & the compulsion of law and instead uses unregulated markets and the goodness of people's hearts. You know, rather like Instagram, Twitter and Facebook are unregulated markets, or did you forget that?

"We enter a little coffeehouse with a friend of mine and give our order. While we’re approaching our table two people come in and they go to the counter:‘Five coffees, please. Two of them for us and three suspended’ They pay for their order, take the two and leave.

I ask my friend: “What are those ‘suspended’ coffees?”My friend: “Wait for it and you will see.”

Some more people enter. Two girls ask for one coffee each, pay and go. The next order was for seven coffees and it was made by three lawyers - three for them and four ‘suspended’. While I still wonder what’s the deal with those ‘suspended’ coffees I enjoy the sunny weather and the beautiful view towards the square in front of the café. Suddenly a man dressed in shabby clothes who looks like a beggar comes in through the door and kindly asks‘Do you have a suspended coffee ?’

It’s simple - people pay in advance for a coffee meant for someone who can not afford a warm beverage. The tradition with the suspended coffees started in Naples, but it has spread all over the world and in some places you can order not only a suspended coffee, but also a sandwich or a whole meal.

The solution is ideal. It gives the person donating the money complete control. If they have the confidence in the business that the goods and services will be delivered to those in need, that is the full level of trust required.

January 16, 2013

After more than twenty years as a transactional trader and businessman in what I called the “strange profession,” I tried what one calls an academic career. And I have something to report— actually that was the driver behind this idea of antifragility in life and the dichotomy between the natural and the alienation of the unnatural. Commerce is fun, thrilling, lively, and natural; academia as currently professionalized is none of these. And for those who think that academia is “quieter” and an emotionally relaxing transition after the volatile and risk-taking business life, a surprise: when in action, new problems and scares emerge every day to displace and eliminate the previous day’s headaches, resentments, and conflicts. A nail displaces another nail, with astonishing variety. But academics (particularly in social science) seem to distrust each other; they live in petty obsessions, envy, and icy-cold hatreds, with small snubs developing into grudges, fossilized over time in the loneliness of the transaction with a computer screen and the immutability of their environment. Not to mention a level of envy I have almost never seen in business.… My experience is that money and transactions purify relations; ideas and abstract matters like “recognition” and “credit” warp them, creating an atmosphere of perpetual rivalry. I grew to find people greedy for credentials nauseating, repulsive, and untrustworthy.

This is what I have learned over my lifetime in dealing with academics. It's so true. Here's another example of an antifragile tangent related to the simplicity of the Merlin Rocket engine.
Rocket science is still rocket science, but the best is not needlessly complex.

September 20, 2012

I've been listening to people talk about how they will change the world for most of my life. Incidently today there is this piece by Eric Raymond, and this piece by Bill Benzon. I do not doubt for a moment that the world has changed and continues to change. In fact, it has been enlightening to run through KOA, The Reconing to help me understand two little tidbits. Let me riff off the tidbits.

In Kingdoms of Amalur, The Reconing, we are playing the role of a fateshifter. You see, we are in the land of elves, gnomes, fae, sprites, boggarts, brownies, jottun and various other creatures. Some of these, the fae, without going too deeply into their taxonomy, are immortal. As immortals they express a great disdain for mortals, because you see, the fae are inextricably bound to the Earth. They represent birth, growth, decay and death, all of which are eternal, and so they are fated in their immortality. This is rather like the fate of neutrinos to be massless and thus travel at the speed of light. As the fateless mortal character, we exist at the opposite end of the spectrum. We are massive and thus bend fate around us and can assume any form, it is a condition of our mortality. I suppose that means I must die at the end of the game, but who knows, I'm only at level 29 and have yet to enter the kingdom of Alabastra, home of the Winter Court of Fae.

The Fae resent change, but must adapt to it, and find uses for it, or exist forever in a state in conflict with their previously eternal fate. For example, the Fae of Sorrows administer the Midden where the dead are separated from their souls. Change has made the Midden to smell to the Fae as it does to humans. Now suddenly their exalted position stinks.

So humans, as being mortals, must in the relatively short time allotted to them must find meaning amongst that which is eternal and transcendent and then force change. We must move swiftly and imbue ourselves with something permanent, or change something that seems permanent. This is what we do when we are confronted with the knowledge that we will die. For the vast majority of us, having children satisfies that condition. We smack up somebody else's life and produce one of the single most life changing changes that we can - creating life where there was none. And of course murder is the counterpart. There it is. End of riff.

In Raymond, the question of tribal prophets is answered rather matter of factly by the first commenter who serves rhetoric to the effect that all the titans of industry were prophets. Why not Ken Olsen, the CEO of DEC? And I have to agree with that point and take it to its proper conclusion which suggests that all such thinking about startup companies and tribes and such purposeful evasions of the public are a species of small-mindedness. This is, of course, the last thing that attendees of a TED seminar want to hear, but I cannot help but be reminded of the sort of eclexia implicit in these endless junkets.

I do not doubt that there is boundless creativity to be found in these tribes. And I find it telling that the speaker to whom Raymond refers begins with a micro history of Superbowl Parties and all such manner of things likely to be captured by the incessant narcissism of social media. But nobody knows what Obama does, they just like the idea that the Presidency is up for grabs and your vote, like your code, and your glib intellectual obiter dicta can be connected into a clever narrative of empowerment.

I am reminded of how many tons of rubber are produced in the world on an annual basis. We all take rubber for granted of course, and we imagine, we being those in the digiterati enthralled by the eclexia of TED, that there must be little of creative interest in the production of rubber and the management of a rubber empire. But I doubt quite seriously that we are correct in such assumptions, rather, we are determined to discount the qualities of such physical artifacts that don't flow over TCP/IP yeilding their secrets to those tools that we can appropriate freely in our open source worlds.

And how are we to change the world?

Well, we don't actually. What we do is we constantly change the way we see the world, and thus in a class of chatters, we frame and re-frame the fashionable intelligence, as has always been the wont and role of the Slice. We who work in close proximity to the Ruling Class. But TED and Google Plus and various streams of Twitter twaddle (and certainly some large unfathomable number of IRC channels) are the new channels that aggregate people into virtual neighborhoods. At long last however, the virtual remains virtual. So now we are witnessing what seem to be like sleepwalkers staring into the virtual multiverse as the stumble through actual streets and wreck their automobiles. Digital consciousness is now a 21st century virus unleashed in the 20th century world. Can it evolve?

I mean to do more than merely suggest but to state that this remote consciousness has devastating consequences for people who must of necessity put their bodies into alien spaces. And depending upon the quality of one's cybermind, every place is alien. There is no such thing as a company town, and this is the community that we are actually looking to build. The tribes fall short. And yet that is the new level of civic engagement, ever smaller, so that ever closer 'friends' feel autonomy in the societies we have built up over history. But these cities will not go away, nor will the distribution networks in place that put rubber on the wheels of all of the millions of automobiles that are also not going away. The virtual people have yet to build a town, and so the question ultimately becomes, at whose mercy are all these changes going to take place?

What is a labor union and what kind of city do they control? Now put them and their expertise in conflict with the TED crowd and what do you get? You get the election of Obama using the Leviathan power of the existing 20th century infrasturucture and physical world to force the labor union to provide the goods and services demanded by the Digerati and their tweeting children.

Do you see the problem as I do?

Silicon Valley is not sustainable. It is not a real, livable place and its vision for living is not real. The changes it makes in the world are to make the common man susceptible to the fashionable intelligence of its Digiterati with no regard or respect for the actual physical networks and infrastructure that it takes for granted. The mega corporations its princelings seek to re-think and remove are the proven successes of the 20th century, and they do not know how to scale their vision of community.

July 12, 2012

I've called this phenomenon 'the logarithmic shadow' because I beleive that incremental desire follows a log function. Could it be that this is all called marginal value?

--

How much do economists (and the economy) depend on the idea (reality?) that rich people don't want what poor people have?

For example, when I was a kid, I spent lots of money on PacMan. At the time, I could never imagine spending $100 on a binge - but I wanted to. I just didn't have the $100. Now that I have it, I'd never waste it on PacMan. Forgetting the 'signal wealth' stuff and the fact that PacMan can be had for free. How is the price of a quarter good for PacMan in such a way that it's cheap enough for poor folks, and 'too cheap' for rich people.

How can anything be 'too cheap' for rich people? Why don't we actually always go for the cheapest stuff? Most importantly, how can this fact be communicated to class warfare conspiracy theorists? If the rich get richer is it always bad news for the poor? Don't super-rich people want rich people to be suckers, not poor people?

July 08, 2012

Progressives have a problem. Aside from their mendacious populism and occasional inversions of propriety, their problem is that they depend upon the economic success of capitalism yet remain in denial of this. Since few Progressives here in America will admit to the broad overlap between their forms of altruism and Christian ethics, they have an unhealthy relationship with scientism and shallow atheism. This rather seals their fate as mostly appearing to be old crypto Marxists with a post-modern lisp. And if that's not them then they're joined to the hip.

The only thing worse than and old Progressive is a young Libertarian, neither of which can be relied upon to instantiate anything of long-standing intitutional value - aside from the idea of permanent revolution.

So how do we resolve this problem, or is it not possible? Creeping socialism can only creep so long - you cannot dim a candle incrementally. Sooner or later, starved of oxygen, it will cease to burn. You see the analogy - Progressives as demonstrated by the presidency of Obama, must turn away from their 'nemesis' of free market capitalism and appoint a few 'socially-responsible' corporations (or 'green' or 'too big to fail') or some other non-economic appellation.

The problem is that Progressives don't seem to have any sense of balance.

March 27, 2012

I'm liking the mocking of English of the credulous. That's why I left it at 'the Trayvon Martin'. Anyway, since I've turned off my economic radar, I had to do a little remembering back on whom I used to read for those several years and I found the following off Mankiw's blog:

March 15, 2012

Greg Smith is about to disappear. The reason why is because we live in an era of cowardice and deceit. The reasons for this era are beyond the scope of this essay, however I predict that Smith will disappear. He will go into that same place where I like to think I live, which is the domain of integrity and courage. It's hard for me to tell because life is a battlefield full of smoke and confusion.

Those who are supposed to be responsible to bring such matters to our attention have not, and so it was on Mr. Smith alone to reveal what we all needed to know. Some might pretend that not all of us need to know that there are moral capitalists possessed of integrity and courage, others pretend that there is no such thing. But those of us who try to have integrity and courage know such acts when we see them, and we understand how painful it is to undertake them. I am like you Mr. Smith, in case you may not have realized how many brothers you have out here in the smoke and confusion.

He will enter the realm of people who are unashamed of bronze medals and runner-up status - those of us who sense the butterfly wing's difference between the efforts required to stand on podiums and the massive difference between the accolades given by those who have no sense of the effort.

Listen to me, I am under the influence of NASA. I purchased a five disk boxed set documenting the endeavors of the Mercury, Gemini and Apollo programs. Last night I watched astronauts - men on a scientific mission enthralled with glee with the spectacle of geology of the Hadley Rille. I watched the extraordinary efforts of men in service of mankind when lives were at stake and millions of eyes were watching. And they were happy, and having the time of their lives. We were right to consider them heroes, even though, by Apollo 15, they were not standing on the podium.

There is an old poem about the strongest and fastest man and to whom life's battles are given. Greg Smith has decided to take no more from the man who thinks he can disrespect his customers and thereby pervert the only morality capitalism possesses which is the mutual benefit of parties.

This is how the decline happens. It happens as those who assumed no good are rewarded with bad news and the myth of evil and incompetence becomes a self-fulfilling prophesy. But we know not to listen, for we are the disappeared. No film at 11.

By the way, it is my opinion that the Volker Rule was all that was needed but purposeful obfuscation has ruled the day, and I agree that Smith is toast.

March 13, 2012

In a contest between Romney and Obama, the country loses. Both posers are interested in selling their image and putting a lid on things. Romney because it sounds like the only thing he would say, and Obama because it's what he wishes he could do. That is to say Obama can do the first thing and Romney can do the second, neither of which is particularly good for America at this moment in history. So I think today that I'm going to follow Taleb and cast a vote for Ron Paul, the nutcase crackpot. Why? Because only a nutcase crackpot like Paul (being very specific) has the nerve to base his entire campaign on a few salient facts and properly directed wishful thoughts.

Let me take a tangent and speak about videogames.

In Skyrim and all the other best crafted RPGs, you spend a long time wandering around taking odd jobs and dodging authority until you get enough skill to take on more and more powerful characters. At some point, you don't decide which boss you want to support, you decide which boss you want to kill. When you become adequately powerful, even the swarms of police and guards are too weak to contain you. In any case, what you never do is sit around studying positions and strategies and then cast your vote for a proxy who will change the world for you.

You can only see the world by killing the obstacles in your path one by one.

Once you've done that and only once you have done that can you understand the world you have changed through your actions. As I apply this to democratic politics in the context of our bourgeois elections and campaigns aimed at the rhetorical level of peasants, I realize that my symbol is just as good as my vote. Except I get to symbolify as much as I want, here on the blog. In other words, I've recognized the value of killing obstacles blocking my view of the world, and for me, 99% of them are financial. Therefore what I need to do is make every effort to kill financial obstacles. That means voting for Ron Paul because only Ron Paul will create the conditions under which the proper disaster will occur in the short term. Obama and Romney on the other hand will sustain a stasis field which will behave like Wile E. Coyote walking on air over a deeper and deeper ravine.

Since I'm in the 5% and in an industry that grows organically by objective improvements, my primary concern is that new money keeps flowing, and also that I can take advantage of chaos and failure. I cannot advocate chaos and failure because it is not in my nature to be a vulture.

January 26, 2012

When I see reasonably intelligent and civilized young, single people who talk with upspeak my immediate reaction is 'Val'. For my international readers, a Val is short for Valley. You may be familiar with the term. If not, check out the YouTube.

So I watched this attractive young woman on television - one of those tech talk shows, and she started spewing about her experience at forgettably cutesy spelled dot com which was funded. Funded means you and 12 other twentysomethings with a cool idea managed to convinced somebody with 100 million dollars that you're worth 4.5 million and you have a year to prove it. And 85% of you fail, some spectacularly - meaning you make it for 3 years and get another 40 people and 12 million dollars and *then* fail. It's a story as old as most old dogs.

What surprised me was how instantly it occured to me that she and 12 of her friends would be an unlucky 13 as soon as she started speaking. The very idea of of spending about five million bucks on any endeavor headed by people with less than 5 years work experience, no kids, overpriced undergraduate educations and caffiene fetishes just seems ridiculous right off the bat. And yet we all know it happens. It happens a lot. It shouldn't happen much at all - but it's how a lot of us think about money and work.

There is a small part of me that wants to start a conversation: The only reason I'm not a Silicon Valley millionaire is because... But I don't want to go there or even think I'm going there. It just seems obvious to me that certain things ought to fail. I'm pessimistic today.

January 16, 2012

His most prominent post-government role was as Director and Senior Counselor of Citigroup, where he performed ongoing advisory and representational roles for the firm.[1] From November to December 2007, he served temporarily as Chairman of Citigroup[2][3] and resigned from the company on January 9, 2009. He received more than $126 million in cash and stock during his tenure at Citigroup.[4]

The Bob Rubin Problem serves to put a face on the ethical problem of public bailouts of private errors. He defies the Hammurabic Code of liability.

December 10, 2011

According to the NYTimes version of popular opinion, most people would say that I'm rich. And considering what I used to think of somebody in my position, I would have been one of those people. But I don't believe it.

I'd like to think of myself as one of The Slice, the talented segment of society who, by their work, keep actual rich people rich. So let me elaborate a bit about my Peasant Theory while I'm keeping this stuff in mind.

The Origins of the Peasant TheoryI originated the Peasant Theory thinking about what Americans would do if the lights went out. It was also part and parcel of my observation as an emergent minority who has made the best of class mobility over the course of my life. What does the Average American expect? What does he have a right to expect? What would he get if America was not super wealthy, and how big is that gap? One enabling metaphor was that of the National Superhighway System.

It's well known that the Interstates were all built to a specification so that battle tanks could be deployed across the country, if it ever came to that. So our highways are strong and smooth - even though the tanks don't need them to be so smooth. Having a car and the ability to drive across country is a side benefit of the military strategic plan of the powers that be. In fact, an ordinary Joe can afford to buy a cheap motorcycle (as in Easy Rider) and get across country. But that is a privilege of him glomming on to something that wasn't built with him in mind and his ability to cross country owes nothing to his native ability to travel. In short, he's a peasant that doesn't have to think or work hard to cross the country, and were it not for the strategic infrastructure of America, the military superpower, he would be stuck in his hometown. Remember that battle tanks don't need highways at all, let alone superhighways. They'd get along fine with dirt roads or no roads, but Fonda's chopper would get nowhere.

So I started to think about this phenomenon in all parallels for emergent classes of Americans. What can we expect in America that we couldn't expect elsewhere and what politics is considered legitimate, what culture is considered legitimate, what education is considered legitimate that is not actually self-sustaining but a consequence of the fact of America's power? In other words what is the difference between a peasant and a free man? What must the free man know and do for himself that the peasant doesn't bother with?

This is a view of society and of mankind that exists independently of our traditional measures of socio-economic class. And it is in this way that I seek to understand people throughout history - with specific regard to their Foucaultian relationship to regimes of power and truth. Are we really free, or are we merely riding in the comfortable belly of the beast? For me, the best way to make the distinction is to consider how people make themselves useful to the powers that be. This is consistent with feudal hierarchies going back throughout history. And what I have concluded is that there is the Slice in every society, just as there are sovereign powers and peasants in every society. What may become absolutely fascinating is whether the Slice can become autonomous. But let's leave that discussion for another day.

Class in AmericaWhen I look at the standard definitions of class I have basically started with a compressed version for black Americans. These are from top to bottom {Hill, Burbs, Hood, Ghetto, Projects/Sticks} It was conveniently five, but there's probably enough reason to split Projects and Sticks into their own separate categories. My upbringing was in the Hood, in the shadow of the Hill, but with ample distance from the Ghetto. I think I live in the Burbs, but perhaps I live on the Hill considering the priceyness of this particular Burb. By the way, I've always considered $300,000 to be rich. In my mind you make that kind of money not just being a doctor, lawyer or businessman, but a *good* doctor, lawywer or businessman. Be all that as it may (and not so crucially important) these follow a kind of 'geography / demographics as destiny' sort of thinking that was useful in my investigations of redlining (with the subheader 'American Apartheid' c.f. Massey & Denton) and my own national search for the right place to raise my family. It also played along the dialogs of 'mentality' for those interminable internecine discussions about proper blackness.

The larger picture was not incedentally part of the rumnations of comedian Chris Rock who spoke about the difference between 'rich' and 'wealthy', and of course by Dave Chapelle from whose comic bit the title of this essay comes. So from that perspective, the top down view of all of America is {Wealthy, Rich, MiddleClass, Poor, Indigent}. What's most important about this selection is that I think of it directly in terms of the capacity of an individual of one class to assist a member of another, it is my rule of Each One Teach One.

The rule works like this. If you are wealthy, you can move someone from the middle class into the rich class. But it is unlikely, without threatening your own position that you can make someone rich wealthy. Similarly and pointedly at liberal politics, if you are middle class, you can make someone who is indigent poor, but you can't make someone who is poor middle class without threating your own position. Similarly if you are rich you can make someone poor middle class. These are, in my mind, hard and fast economic laws - and like the speed of light, they are regularly abused in fantasy fiction but are never broken in reality.

Weath and FreedomLet's start with rich - because it is the baseline of freedom looking at the high side of Boyd's Razor. (If you want to be free, there are two ways you can do so, you can be rich or you can reduce your needs to zero). I'll deal with the low side later. A rich man is free, and he will remain free so long as the powers that be respect his freedom. A rich man must defend his riches, he must have some skill in that regard no matter how he acquired them. But the most important aspect of riches are that they enable freedom in the civilized world. A rich man can employ others to assist him in accomplishing anything he desires - there are no basic things he cannot afford. Essentially, a rich man can fund his own destiny. I use such vague terms because I'm not trying to think in terms of affluence in the context of a consumer society, but in terms of the broad and general affairs of man. What can a man who is not oppressed do? What might he want to do with his freedom? Whether such things are wise or foolish, the free man is not constrained by his own lack of financial wherewithal.

Wealth and WorkThe inspirational thought presaging this essay was the idea that if I am to be considered 'rich', which I don't think I am, there has got to be two kinds. Working rich and idle rich, and I am most definitely in the former category. The same can be considered, to a lesser defining degree of the working and idle wealthy. But I suspect that the idle wealthy tend to use a bit less of the Slice than the working wealthy. The business of the world, it seems to me, is more dependent on the machinations of the wealthy whether they work or not. The Slice are the enablers, the demiurges of human affairs. I think much more depends upon their moral decisions - to the extent that they are to offer their services for the various masters they might have.

November 23, 2011

There's a great passage in Niall Ferguson's latest book Civilization: The West and the Rest that's an excellent jumping off point for discussions about income inequality and the prospects for capitalism. I also see this in terms of my Peasant Theory, so this is an interesting and important area of my concern. My emphasis is bold.

If the Cold War had ever become hot, the Soviet Union would very likely have won it. With a political system far better able to absorb heavy war losses (the Second World War death rate as a percentage of the pre-war population had been fifty times higher than that for the United States), the Soviet Union also had an economic system that was ideally suited to the mass production of sophisticated weaponry. Indeed, by 1974 the Soviets had a substantially larger arsenal of strategic bombers and ballistic missiles. Scientifically, they lagged only a little way behind. They were also armed with an ideology that was a great deal more appealing than the American alternative in post-colonial societies all over what became known as the Third World, where poor peasantries contemplated a life of drudgery under the heel of corrupt elites who owned all the land and controlled the armed forces.82 Indeed, it could be argued that the Soviets actually won ‘the Third World’s War’. Where there was a meaningful class war, communism could prevail.83

Yet the Cold War turned out to be about butter more than guns, ballgames more than bombs. Societies living in perpetual fear of Armageddon nevertheless had to get on with civilian life, since even the large armies of the 1950s and 1960s were still much smaller than the armies of the 1940s. From a peak of 8.6 per cent of the population in 1945, the US armed forces were down below 1 per cent by 1948 and never rose above 2.2 per cent thereafter, even at the height of the American interventions in Korea and Vietnam. The USSR remained more militarized, but the military share of the population nevertheless declined from a post-war peak of 7.4 per cent in 1945 and remained consistently below 2 per cent after 1957.84The problem for the Soviet Union was simple: the United States offered a far more attractive version of civilian life than the Soviets could. And this was not just because of an inherent advantage in terms of resource endowment. It was because centralized economic planning, though indispensable to success in the nuclear arms race, was wholly unsuited to the satisfaction of consumer wants. The planner is best able to devise and deliver the ultimate weapon to a single client, the state. But the planner can never hope to meet the desires of millions of individual consumers, whose tastes are in any case in a state of constant flux. This was one of the many insights of Keynes’s arch-rival, the Austrian economist Friedrich von Hayek, whose Road to Serfdom (1945) had warned Western Europe to resist the chimera of peacetime planning. It was in meeting (and creating) consumer demands that the American market model, revitalized during the war by the biggest fiscal and monetary stimulus of all time, and sheltered by geography from the depredations of total war, proved to be unbeatable.Ferguson, Niall (2011-11-01). Civilization: The West and the Rest (Kindle Locations 4245-4266). Penguin Group. Kindle Edition.

It really boils down to this. Income inequality is the consequence of the ability of individuals and their companies to get a better handle on what the consumer wants in a consumer economy. If you don't have a consumer economy, then the needs of human beings are very basic and entirely capable of being sustained by a central planning government bureacracy. This is how people survive in the Third World without consumer market economies. Human beings can and do adapt to living in relative poverty.

So I want to draw attention to the income inequality between the American middle class and the Soviet middle class. The parents of the Baby Boomers was the first generation of Americans to have access to consumer credit. I grew up in Los Angeles with no credit. My back to school clothes were bought on layaway at Orbachs on Wilshire Boulevard, and even that was a big deal. (Signal Wealth). Is the cost of this banking crisis in America is to take consumer credit back to that era? Could we survive without consumer credit? Of course we could, and the economy would shrink, but personal savings would increase. And it is precisely that formula of reduced spending in the household that people rail against when it is the rich household that is doing so. I believe that a good percentage of American employment is foo foo employment, which is to say 'nice to have' from the perspective of corporate employers who seem to be arbitrarily laying off. That is not to say that many corporations are not well managed and simply callous in their cost-cutting of rank and file employees rather than trimming management. But to say that there are new classes of consumer goods and employment deriving from that which can be considered expendable.

It seems to me that from the Occupy POV, which I interpret as socialist and anti-corporate (but also useful from some perspectives), the waste, fraud and abuse of capitalism comes from its ability to make extraordinarily wealthy people who have orders of magnitude more wealth than the rest of us. To the extent that they are not specific, the enemy is wealth itself. In otherwords they want class warfare. If they are to be specific, then they have to say what sort of wealth is bad. To attack the idea of the corporation itself is to attack equally the makers of baby food and the makers of chemical weapons. Dow Chemical is a corporation and so are the makers of Gerber, Nestle. Nestle is 5x larger than Dow, and why shouldn't they be? I am not able to differentiate Occupy's definition of good wealth vs bad, but if they have one principle with which I agree it is that there should be no public bailouts of private failure. This is an endorsement of private enterprise without industrial (central planning) policy. But the extent to which they may desire advanced and burdensome regulation could amount to the same thing. In any case, without being specific about which corporations are good and which are bad, their focus on banking may end up simply rolling back consumer credit. That doubles down the bet against the consumer economy.

I have always looked at the number of choices in the supermarket as an indicator of the health of the economy. I'm not alone in wondering what's wrong when I don't see fresh produce of the sort I want in that aisle. The connection to signal wealth consumer items, as foo foo as they may be is what gives the American (peasant) consumer his status and what makes his providers rich. Entertainment money is but a fraction of the American consumer's budget, but the connection is much clearer. U2 is rich because their audience pays them. Tom Cruise is rich because his audience pays him. The same is true for McDonalds, Nestle, Dow, Xerox, Ford, etc etc. Americans would not stand for their choices as consumers to be reduced to 'plain wrap' or GI supplies. That reeks of the Soviet system. But inevitably our extra wealth (a lot of which is foo foo signal wealth) comes exactly from that choice being made available in the market and all of the 'extra' business created by fashion. If there were only one style of sunglasses for the masses, then Ralph Lauren and Oakley would be flat on their asses.

Do you want there to be people who can afford a BMW, or should every car be 'the peoples car'? I want the connection to be clear. The more the government regulates, the fewer legal choices exist. The fewer that exist, the more you constrain the economy and make it more centrally planned, the more you increase income equality, the more it works for the Soviets, the more you approach as our good friend CNu terms it, 'warsocialism'. When a job is just a job, then a military job is just like any other.

November 22, 2011

One thing any Occupy squatter can tell you is that he hates the plutocrats. I can agree with that, I suppose. What's a plutocrat? I'm going to guess that a plutocrat is a crony capitalist who profits from lobbying Congress into granting him monopoly or oligopoly powers. In other words, he short-circuits free market competition by twisting the arm of government to grant him license and guarantee him business.

I've always hated that. Why? Because I learned at a very young age that I needed car insurance. I thought I just needed a driver's license and a car.Then I learned that the police can stop you and ask you to prove that you have bought insurance and give you a ticket if you didn't have it. And so I had to pay, living in a redlined neighborhood, the rate that somehow every insurer agreed on was the proper rate for me living in 90016 at the age of 19. So I grew up with an intense hatred of insurance companies - those government mandated entities that made it safe for people who had money for premiums to live their lives without risk along with those of us who had to deal with risk. In California, if you had 100,000 in liquid assets, you could self-insure. Pay up or avoid the cops.

The resentment lasted into my 30s, I guess. But I started to wonder why mothers of gangbangers didn't take out life insurance policies on their sons, and other ways to game the system. I paid close attention to the changes in the law with regard to the new coverage called 'uninsured motorist' and then realized something new. Not only do insurance companies know that some people won't buy insurance, but they insure against that - and who pays? You guessed it. The insured motorist.

But why is car insurance necessary anyway? When you think about it, it's because so many people buy cars on credit. If you wreck the car or even ding that rapidly depreciating object you possess but don't own, somebody wants to get their money back. That somebody, the finance company, doesn't really trust you not to wreck. Nowadays, some people even need payment insurance - you're not even trusted to pay the note. So it all gets back to trust, or I should say a lack of trust for the uninsured motorist. Or in my case, that realization, when some cholos rear-ended my Karmann Ghia on the Harbor Freeway, then fled the scene. There's all kinds of liability out there, and guess what? Shit happens.

What does any of this have to do with plutocrats and oligopolies? Somebody convinced the State Legislature in California that if it was going to have 15 million some odd drivers, and all the car dealers wanted to sell them cars on credit.. all of the dynamics I just explained. You can be sure the Automobile Insurers of California or whatever their name is, watchdogs that legislation.

There is something inherently difficult about the insurance industry. If I had a million bucks, I wouldn't try to come up with actuarial tables and register with the Insurance Commission to do business in California. But somebody does, like that annoying Flo chick in her white nursey uniform and that obnoxious smarmy little gecko with the New Zealand accent, and that snarky cartoon babe with purple hair, not to mention that 32 bit animated general with the hat over his eyeballs. Oh wait, those are just corporate logos for Progressive, Geico, E-Surance and General, not the oligarchs themselves. I'd imagine there are almost no youth in America today who go to college and say that someday they want to be the CEO of a better insurance company than State Farm. Who thinks Prudential or The Hartford are sexy? Even when Farmers is building Los Angeles a new football stadium, that ain't sexy.

But you can't think about car insurance or car dealing or car financing or hit & run driving without thinking about all of that, and you can't really do anything new in that business without having a lot of expertise because ultimately it's about regulating human behavior around models of risk. Non-trivial to be sure. And did I mention lawyers? Do you have any idea how much legal procedure happens around car accidents, drunk drivers, underage drivers, vehicular manslaughter, hit and run and plain old grand theft auto?

I wonder if Occupy doesn't mention anything about the insurance industry because they don't know, or they acknowledge it as a reasonable thing, or they don't have a cutesy epithet like 'bankster' for actuaries. The current administration said that health insurance for everyone ought to be the law of the land. As soon as he said that, I heard that angry voice of the 19 year old me being rejected at Mercury, the discount car insurance firm, just for being too young. Yeah, they have all the angles on car insurance figured out, and they have it figured out for every sort of insurance. Why? For the same reasons, we're all living on somebody else's credit and the system cannot afford the uninsured.

The thing is, of course, that everyone can game the insurance business, and the wealthy can game the game and hedge against those who don't play. But that's all about how much risk you can stand. The fundamental question remains. Can you play in a risky world without insurance, or do you need an industry to help you get through a life with some legal recourse? Don't want to lose your house because you get sick? There's an insurance policy for that. Don't want to get your car repossesed after an accident? There's an insurance policy for that. Don't want to miss a payment on your credit card? Don't want to die broke? Don't want to have a cavity unfilled? There's an insurance policy for every peasant situation you can get yourself into. Hell, I should sell pepper spray insurance to protesters.

November 10, 2011

Transcript: "Good morning Mr. van Rompuy, you've been in office for one year, and in that time the whole edifice is beginning to crumble, there's chaos, the money's running out, I should thank you - you should perhaps be the pinup boy of the euroskeptic movement. But just look around this chamber this morning, look at these faces, look at the fear, look at the anger. Poor Barroso here looks like he's seen a ghost. They're beginning to understand that the game is up. And yet in their desperation to preserve their dream, they want to remove any remaining traces of democracy from the system. And it's pretty clear that none of you have learned anything. When you yourself Mr. van Rompuy say that the euro has brought us stability, I supposed I could applaud you for having a sense of humor, but isn't this really just the bunker [or banker?] mentality. Your fanaticism is out in the open. You talk about the fact that it was a lie to believe that the nation state could exist in the 21st century globalized world. Well, that may be true in the case of Belgium who haven't had a government for 6 months, but for the rest of us, right across every member state in this union, increasingly people are saying, "We don't want that flag, we don't want the anthem, we don't want this political class, we want the whole thing consigned to the dustbin of history." We had the Greek tragedy earlier on this year, and now we have the situation in Ireland. I know that the stupidity and greed of Irish politicians has a lot to do with this: they should never, ever have joined the euro. They suffered with low interest rates, a false boom and a massive bust. But look at your response to them: what they are being told as their government is collapsing is that it would be inappropriate for them to have a general election. In fact commissioner Rehn here said they had to agree to a budget first before they are allowed to have a general election. Just who the hell do you think you people are. You are very, very dangerous people indeed: your obsession with creating this European state means that you are happy to destroy democracy, you appear to be happy with millions and millions of people to be unemployed and to be poor. Untold millions will suffer so that your euro dream can continue. Well it won't work, cause its Portugal next with their debt levels of 325% of GDP they are the next ones on the list, and after that I suspect it will be Spain, and the bailout for Spain will be 7 times the size of Ireland, and at that moment all the bailout money will is gone - there won't be any more. But it's even more serious than economics, because if you rob people of their identity, if you rob them of their democracy, then all they are left with is nationalism and violence. I can only hope and pray that the euro project is destroyed by the markets before that really happens."

October 21, 2011

I have been thinking about how awful I would be to the hippies of OWS. But then I would only be throwing rotten tomatoes. They like vegetables, right?

Of course everybody who is 'occupied' is not a hippy. But I cannot seem to get out of a particular bubble. I think my G+ account has been spammed to that crowd. I know, unsubscribe. But I need to know what everybody thinks. Nevertheless, I've been thinking about the nature of this protest and comparing it to the LA Riots, where people were ready to burn down buildings. Well, actually they did burn down buildings. That's the level of street action that gets results. Militancy.

So now the Kadaffi is dead, it's probably a good time to take inventory and compare America to the Middle East.

In good old Washington DC, Barney Frank is still chilling, and journalists like Wolf Blitzer are looking mighty fine in their silk suits.

The Tea Party has been shown up a little bit. But their ruckus has been a bit more long in the tooth than the new OWS peasants. My favorite stories from OWS ground zeroes reveals that my cynicism has gotten the better of my skepticism. In one, some dude with felony warrants was hanging out in a tent at Z. Park because he knew he could score drugs and get free food. In another, some poor fool woman who thought she could just go out and sleep in the same tent with a stranger was sexually assaulted.

Tangentially, there's a big CNN story about how many Americans end up behind bars in the Prison Industrial Complex. There's a reason for that: we have lower tolerance for people who have felony warrants and sexual assault. In other countries, those people are free to roam the streets.

So I continue to compare OWS to football. Football is still producing more concussions and injuries. Football is still getting more people to yell and shout in a community. Football is still producing more concrete winners and losers that people can objectively track on a weekly basis.

I hear that the movement is planning a bank run on BAC. That is really interesting. I wanna see how well they do. I heard from Rick Santelli recently because I was on East Coast time. But I don't have time for his pith. That's a long show - too long to record and watch.

October 20, 2011

If I had to describe the root of all our financial difficulties in two sentences they would be:

The linchpin in America's financial system was that it assumed that in the worst of times only 3, or maybe 4% of Americans would stop paying their mortgages.

When that number DOUBLED to 6% the whole system froze up.

Now, let's use one more simple analogy. This from Lingales. All of the dicey CDOs, swaps etc were all hedged risk. In short, they were nothing more or less than insurance policies against mortgage defaults. The net effect was some four fools bought four separate insurance policies on the same house. When the 6% f America's houses burned down (against all the odds and anybody's best guess) all of those policies could not possibly pay off. So the all of the insurers were headed for certain failure. Except that 'we' wouldn't let them fail, because, analogously speaking, we would have no more such thing as fire insurance. And we couldn't have that, now could we?

What we have essentially done now, is to use the 'full faith and credit of the USA' aka Treasury Bonds to use instead of fire insurance, and given the all those insurers a bailout via low interest rates and cash until they get on their feet. But the cost of all those insurance payouts have now been transferred from Wall Street to the US Treasury (meaning you Mr. Taxpayer) - mind you without much work being really done on making any houses more fireproof.

So all of these corruptions the OWS crowd will inevitably find are just kids playing with matches. The larger problem remains unsolved. Which is how do you stop from over-insuring against 'fire' i.e. financial failure?The problem isn't that capitalism is broken. The problem is psychologically, we don't like the consequences of losing the wealth it produces. We like playing with fire. We just don't like getting burned. Nobody does. So we keep insuring against getting burned.

The problem is that you can't. Because this is America, and most Americans believe they can guarantee anything. That's why Obama was elected because he promised he could guarantee healthcare insurance for everyone. And this is the fundamental problem.

Everybody in OWS is suffering from the exact same illusion that caused the problem in the first place. They believe in guarantees. They believe that all you have to do is find the right sucker (or class of taxpayers, or government agency, or Wall Street company, or Buffet-like billionaire) who will pay a little bit more for the guarantee.

It is not the desire for security that causes our ruin, it is the implacable demand for it.

Listen to the rhetoric and you will see the fragile state of the American soul. We demand infinite recourse against all slights and offenses. Against fat in the food at McDonalds. Against incompetence in the teachers in free public schools. Against offensive remarks and jokes. Against the very presence of unwanted people from undesireable countries. Against unbelievers. Against believers. Against the possibility of dying of cancer. Against the belly fat you get from AIDS medication. We have become a nation of infants with zero tolerance for pain. So somebody has got to pay.

Today is a good day to be a grifter. That is because all the yellers and screamers want to hear is how somebody screwed up and made their life miserable. All a grifter has to do is agree and sell them an insurance policy against that somebody, write up some legal fine print that says 'you take your chances' and voila - there's an app for that.

Michael DC Bowen - I'm glad to see this discussion, but it's not specific enough. What I would like to impress upon people is that the business of finance is very important and very difficult, and unlike 'Trading Places', you cannot get away with murder 99% of the time. That is because people, markets and information are unpredictable. It's all about what you know, when you know it and how much confidence you have. Since human beings have certain cognitive limitations, there will always be errors, but they are not necessarily fraudulent. The problem with the majority of the criticism directed at the business of finance & investment (aka 'Wall Street') is the assumption that there is an inside game going on. If there is a confidence game, it is precisely the same game that blames 'Wall Street' without knowing how many people know the system. So let me try to explain this property.

First, understand that there are millions of people around the world who play in these global markets. All of them are pretty much equally smart, but only some of them are trusted. Lay people trust Goldman Sachs the way they trust Apple. There are plenty of engineers everywhere who can make computers that do the exact same thing as Apple computers but only Steve Jobs gets to be Steve Jobs (even beyond the grave like Elvis). This is called 'mindshare'. It means when you think of something that's actually common, you attribute it to a few specific actors. They 'own' your thinking. So 'Wall Street' owns the thinking about finance and investment and people are lumping them all together. If this reform movement wants to get traction, the first thing they have to do is disambiguate the actors. Just because there are hedge funds doesn't mean Wall Street only makes money from hedge funds. Hedge funds go broke all the time.

If you really want to understand what's wrong with the investment community you have to stop saying that it's evil and begin to understand that it's stupid. Which is to say, extending our analogy here, some people made stupid bets.

You should know, by the way, that I am a computer programmer who builds financial systems.

Michael DC Bowen - The next thing I want to do is give people who are trying to learn some shortcuts. Cory Doctorow doesn't understand how economics actually works. His concept of 'Whuffie' is cute but laughable. Part of the problem with dot-commers and their universe is that they live in reality distortion fields. They fail much more often than they succeed with their economic theories. Even market professionals know that the best economists get it wrong, but there are some players you should be hearing out. So I'm going to give you three names of people who understand .

1. Nicholas Nassim TalebHe, first and foremost understands how traders and investors mistake the map for the territory. That is to say, they mistake what their computer models tell them about risk from the actual reality of risk. He used to run a hedge fund, and coined the term 'Black Swan'.

2. Nouriel RoubiniKnown as Dr. Doom. He is the guy who predicted most accurately the scale of the credit crisis. He is a super bear and believes everything will fail, but he's not stupid and he has been proven correct in many instances. He's not somebody whose solutions I particularly favor, but he is well informed.

3. David P. GoldmanThis is the guy I listen to and trust. He used to be a very high level guy in the Street and got out when he saw people starting to do stupid things. I trust him implicitly and have been following him for about 3 years now (the other two slightly longer). Goldman writes as Spengler'

Look these three guys up and listen to what they talk about. This will take you a couple notches above the political BS that you can get Reich and Krugman to talk about.

I learned of all these guys through listening to Bloomberg Surveillance. If you want to get to know Wall Street at a serious level, that is the place to begin.

7:31 AM - Edit

Michael DC Bowen - Finally, I want to help you understand why there is no political solution, and it may sound biased but hear it out. One of the economists I've been paying attention to is Luigi Zingales. He came up with a solution to the mortgage crisis three years ago. It's called a debt-for-equity swap. It works like this.

The cost for your house was 300,000 when you bought it. It is now 200,000. Your mortgage was 275k. You are essentially 75k underwater. You have no incentive to pay off the mortgage. The bank has no incentive to forclose. That's because they have to then show that A) they had a non-performing loan and B) they take the hit on the asset that you now are taking. So.. what if you agree, you and the bank, to do a Debt-for-equity swap. The bank simply agrees to lower your mortgage size to 200k in exchange for your promise to give them the first 75k when you sell the house.

You now have a smaller mortgage and you are not underwater. You begin to get equity if/when the house goes to 275. Your monthly payment goes down. The bank now has less worry about you walking away from your mortgage, their loan performs, and they can book the 75K.

The problem is that no politician would get to take credit for saving the homeowners because the transaction is entirely between the books of the bank and the homeowners. There's no government program or government money involved. So even though this would solve the foreclosure crisis if it were legal, there's no political incentive to make it so in Washington.

August 10, 2011

The American Revolution was in 1776. The Russian Revolution was in 1917. Was America too early? Were the Founders simply not evolved enough?

CD rants on about the 'special debt' MLK says was owed to the Negro. From my way of thinking, the Negro thought his own way out of the existential beartrap of race, except of course for those who didn't and still cherish the Negro Solutions proposed 50 years ago by the likes of Bayard Rustin and A. Phillip Randolph. Those of course were socialists and Rustin's arc proved to be prophetic with regard to the intervention that Progressives believe they are executing on the nation.

It brings me to some questions about the extent to which various diehards feel that the American experiment is permanent and why exactly they stick it out.

I'm interested in your outline of the dimensions of that special debt, and exactly how 'America' is supposed to pay it. I say that very idea is socialist. I wonder, in consideration of that, how much you would suggest that the American Left is completely unimpressed with the idea of a completed America - ie that the sort of republic America is supposed to be is so wide of the premises of the Constitution, or of the proper ends of enlightenment that King's experiments as well as those of such activists after him, are just the beginning of an evolutionary process.

That being the case is it nothing more than America's wealth that keeps them here? I mean if the Constitution was nowhere near good enough, why not start fresh elsewhere? What is the special promise of America? Is it perhaps the flexibility of its body politic? Do Progressives believe they can morph America into the shape that Marxists failed to accomplish in Europe and Russia?

What is the endgame?

I think Progressives beleive that their progress does not end, that there are going to appear more steps in Maslow's hierarchy they will be able to deliver once they eliminate, through the miracles of the scientific method, all traces of the lower needs from the world's populations. In other words, utopia, or at least six or seven more Constitutional Amendments.

August 01, 2011

Congressman Allen West (FL-22) made the following statement tonight on the passage of the revised Budget Control Act of 2011.

"A year ago no one would have thought it was possible that the dominant conversation within the United States Congress would be about cutting spending.

For the first time in American history tonight, the United States House of Representatives raised the debt ceiling with equal to or exceeding spending cuts. It is imperative now that we alleviate the anxiety of the American people and our capital markets and instill a sense of confidence and certainty regarding our fiscal policy. This will assuredly lead to long term sustainable economic growth and American jobs.

The task before us now is to follow through with a plan that was a 70- 75 % common sense solution, and execute it to 100 % perfection. I remain committed to ensuring this is the dawn of a new era in fiscal responsibility in America."

I can live with that statement. So far West has said very little that I can disagree with.

July 28, 2011

I am troubled by the prospect that Obama will become the first President to get smacked down by Moody's, then again, what's Moody's. America is still the most powerful and richest nation on the planet, it's just a pitiful shame that this knucklehead President was so blind to think he could put on brakes and have no plan whatsoever for accelleration.

"I just want to share the wealth." will go down in history as one of those moments in which the President's facility with that economic thing we are is proven to be woefully inadequate.

Boehner is demonstrating that he can't add either. Apparently his plan, now accounted for by the CBO, doesn't even meet his own criteria. He's about to be a day late and a couple hundred billion short. Thursday is voting time, and Harry Reid, super-genius has got several crates of Acme products just a-waitin'.

In the meantime, I just read a remarkable story about a man with an 800 FICO score, 30K in the bank and 20% down was not approved by Wells Fargo for a condo loan. We are back, ladies and gentlement. Back to 1981 - well, not quite yet. We don't see the inflation yet, but we are in those days of liquidity crisis. And guess what, you don't get no credit, suckas.

My man David Goldman tells us that Moody's is the company for people to lazy and/or inept to do their own credit analysis, and those that know already know and have hedged appropriately. When America goes AA, we'll still be America, and the deals we will do, we will do. This is the realpolitik that Obama is expecting he can play, like the rest of the Social Democrats who find nothing particularly upsetting about banking on the IRS' abillity to collect rain or shine.

The IRS will be hacked.

That's what happens in banana republics. Realpolitik and deals will be done because of powers that will force them to be done. To hell with merit. We don't even talk that language any longer. Once upon a time, there were no gambling casinos in California and we approved them for the tax money. Once upon a time there was no lottery in California and we approved it for the tax money. Today marijuana and same sex marriage await their day in the legal sun. Tax it! That makes it OK, so goes the logic. That's Double A ball. Bush league thinking.

July 19, 2011

I know my father. I knew my father's father. I know the name of his father as well although he died in 1918, long before I was born. I have confidence that my resemblance to all of those men is more than genetic. I inherit their character and demeanor, and I have been well served by this.

The other day, reading in The Confusion, I came across a passage that immediately made me think of contemporary black American society.

“These Malabar women are as free with men, as Charles II himself was with women,” Jack explained. “In these parts, a man can never tell which children are his. Or to put it another way, every man knows his mother but hasn’t the faintest idea who his father might be. Consequently, all property passes down the female line.”

“Including the crown?”

“Including the crown. One peculiarity of this arrangement is that a man, going in to pay a call on a lady, never knows what other man he might discover in her bed. To prevent awkward situations, a gallant therefore leaves his weapon leaning against the door-post when he enters — as a sign to all who pass by that the lady’s attentions are spoken for.”

I don't mean to suggest much more than that there is a well-functioning matriarchy alive and well in black society, and it is significant. Perhaps if it were admitted and understood, then we might find some interesting patterns emerging.

Like most of the Kwaku set, I engaged quite a bit on last week's controversy over who got married in slavery days. And since I wasn't born last week, I have heard all of the generalizations about the greatness and persistence of the African, the legacies of slavery, the refutations of Moynihan, black macho and the myth of the super woman, and my new favorite - the Luther Problem, which is kinda like The Denzel Principle. So let me digress on that a bit.

The Luther Problem is the extraordinary acceptance of black women of the romantic blatherations of gay black men on the reverse DL. IE gay men singing love songs about women. Which is to say there is something profoundly odd about the fact that women fall in love with men who use the romantic proxy of gay Cyranos. A chair is just a chair, even when there's no one sitting there, but a male is not a man and a homo is not a wingman. Unless he is, and Luther was. There is surely something to protest in this point of view, but I won't hear it from anyone who prattles on about Catholic priests. Either love is Platonic or it is not. End of (strange) digression.

So this basically boils down to the fundamental question of whether it is reasonable to make beef about the extraordinary fact of black single parentage. Is it cultural or economic phenomenon? If it is a cultural phenomenon, then the extent to whether it should be considered positive or negative must depend on your view of matriarchy.

July 13, 2011

Like most Americans, I didn't know Eric Cantor before today. But he stood toe to toe with the President and neither of them blinked. I think we're going to find out what those two men are made of in the next few days.

As much as I take tax abatement to be a one note drone with the intellect of a stone, I gave it a second thought today as I read the various hearsay over the negotiation showdown. The counter to the argument I've been making presented itself to me as I thought about the size of our numbers.

When you're spending trillions and you start negotiating between 1.5T and 1.7T, it's easy to forget that how big that T is. Somewhere I read that 2.5T was within the realm of possibility, if the appropriate cuts were made. Now splitting the difference between 1.7 and 2.5 with some mix of tax increases and loophole closings sounds like a deal. Let's say you split it 50/50. You're trying to cut 800Billion.

So you say OK Mr. President if you cut 400B in spending I'll concede 400B in revenue. Deal.

Hold up. Wait a minute. What's 800Bilion? 800 Billion is the total cost of the Iraq War to date, with 100 Billion to spare. So you're telling me that to meet the President halfway, you have to raise taxes to the tune of more than half the cost of the Iraq War? Just to get cuts in *discretionary spending*?

Sorry. Didn't I mention that? Non-Defense discretionary spending is about 600 billion per year. Defense is another 600 billion. The 2011 spending plan is 3.8 and the revenue plan is 2.1T leaving a shortfall of 1.65T except we're so deep in the hole paying interest on the debt that number keeps growing.

So we spend 1.7 trillion more than we make, we keep raising our credit limit, and to meet the President halfway means we pay 400B more in taxes. Given all that, we break even and we're spending 2.5 Trillion a year.

The temptation here is to keep using the Ts and the Bs and look at 'split the difference' and abstract with percentages. It's very easy to get comfortable doing that, which is exactly why the banking industry failed and has yet to be fixed, recovered or trusted. I kid you not when I tell you that we used to have something called a Savings & Loan industry whose focus was getting people in America mortgages without using leveraged CDOs and hedged tranches of loans who originators were 6 parties removed. America doesn't have a Savings & Loan industry any longer. It's gone. Like the Apollo Program. Like $1 gas with 10x Blue Chip Stamps. They are all uneconomical now. The opportunity to go back does not exist. That's why that temptation is foolish in the extreme.

What the President has now is the bully pulpit, which means a script and some fraction of the American public that still trusts men in blue suits, white shirts and red ties when they speak on that thing called 'prime time television'. But the bully pulpit doesn't make money and I've never seen it make people want to spend money.

No Mr. President I'm not going to eat my peas because they're not my goddamned peas. I didn't order the peas. You and your predecessor did while you were out shopping for stuff you thought would be good for me. I'm pushing the plate back and I'm not eating those peas. And I'm not going to scrape them off my plate to the dog, or my kids either. Matter of fact, I'm going on a diet. And I'm going to the cupboard and see what other expensive fatty crap you've been out buying. And we're going to make you take it back.

So this is the standoff.

It has come to this, and this will end in tears. I'm afraid our President is unprepared to convince the American people that he's the kind of leader who can make us eat our peas and dare us to say something. He's right, this wouldn't have happened to Ronald Reagan because Reagan enjoyed being a cowboy. But Candidate Obama was a healer, a community man. A lover, not a fighter. Which is why Eric will call the bluff, and face what?

April 28, 2011

My (new) boss gave me something to think about the other day as we were eating Bahn Mi at the local Pho joint behind Walmart. He said, why don't you go and work in Singapore for a month, you know, when we get the right engagement? I love my new boss. Finally, somebody who thinks like me. What have I been doing all these years?

Thsi morning's Bloomberg News had me reading about a gent from 'Middle Africa' who owns a pineapple farm there. He got his loan from Ecobank in which Mark Mobius is a stakeholder.

Pineapples grow in Africa? Mark Mobius is still around, in Singapore? I clearly have been out of touch for a long time. My latest podcast download from the RSA featured an enviro-wackjob who nonetheless provoked me into thinking that it might not be a bad idea to live in Asia. I might like it better than I like a lot of things that I don't like in America.

I say 'in' America rather than 'about' America, because the things that I love 'about' America I love anywhere they can be found, like a good Bahn Mi, and enough wifi to get me Bloomberg News on my iPad, and people who ignore Donald Trump, and a nice hotel room with all sorts of pillows. And obviously everything that's in America isn't what America is about. I think that's something a certain class of obnoxious and objectionable Americans don't understand, and I'm happy to leave them behind - just to get their noise out of my head.

I have a lot of what I call external imperative noise in my head these days. It makes me a very inefficient me. I'm going to air my brain out in the next couple of weeks. It should be good.

In the meantime, it makes sense to keep in mind what it is that Asians and Africans are trying to acheive and at exactly what cost. It might very well be a low cost with a high reward, and it seems to me that I need to figure that out.

Imagine, if you will, the following scenario. Bernie Madoff is the tipping point, or worse yet, the tip of the iceberg and the guys at Zero Hedge are right - that the only thing left to do is wait for the rest of the sucker to pony up. The affluent and lumpen rich get soaked over the next decade and the the Obamaheads get exactly what they want, a big fat stupid undifferentiated middle-class with very little more prosperity than there was in 1952. Which was good if your idea of luxury was a Packard. America goes back to Fred and Wilma-style one car, one kid families and you have a great ocean of grey equality. There will be haves and have-nots, but no more have-mores like me. We'll all be in Singapore with Mark Mobius.

That's a crazy scenario. There's no way I have the capital to be a baby banker chasing waterjug moms in Emerging Markets. But I can start to think along the same lines as my (new) boss, who has coders in South America, family in Bangalore, and an office in Lower Manhattan.

February 25, 2011

In May of 2008, I went to the mat looking for some sensible discussion about the US policy in the Horn of Africa and Somalia in particular. There was a lot of noise surrounding my calling Somalia a failed state, which it was and still remains. I would say 'much to the consternation of my opponents on the matter' but it's difficult to see if they were opposing me just for spite or if there was real logic behind their contentions. Perhaps in retrospect, some of those questions might be answered. Cobb remains a fertile field for investigation.

So I have seen the straw that breaks my camel's back in the tragic deaths of Adam, Adam, McKay & Wriggle. So now I'm opening up the can of worms, heading down the rabbit hole and otherwise 'going there'. I need to get some high level understanding of how US policy in the Horn has succeeded or failed in effecting this increase of piracy which now clearly calls for stepped up military action. What has transpired on the ground that has made the sea dangerous, and how bad are we going to let it become?

This article by the Economist is nicely round and informs me about CTF-151 which is the group of military ships working in coalition with EU-sailor-types to have a counter-terror and anti-pirate mission in the area. I've given them props when they've succeeded, knowing that they can do the right thing, but I'm still not convinced that the current ROE has been stepped up appropriate to the increase in the piratical.

There is a general moaning out there, where are the carriers? Libya is coming apart at the seams in what appears to be a much more violent way than we've seen in Egypt and there is no American carrier in the Med. The situation seems to be that there are some five or six thousand 'Westerners' stranded in Libya with no way out. It all gets back to my speculation gathering evidence I want to see that Obama really has no strategic military sense and has politically cowed the Joint Chiefs. So long as Americans are dying only by the sub-dozen, he can keep a lid on things and his press secretary can defer questions. But this just confirms what I've known about Obama for a long time, which is that he only really cares to master the dynamics of domestic affairs, the world be damned.

My position is fairly simple. I am for the US to be the global police of the seas. I am less sanguine about an Internal Third World than I have ever been. This means that I am more pro-global with America as master of premium markets and the rest of the planet producing and consuming the cheaper stuff. That absolutely necessitates free international trade and law and order on the high seas, which I think is best accomplished by the American Navy as strategically envisioned by Thomas PM Barnett. My mind is open on The Horn. But the piracy must stop. Allowing it to fester and grow these past several years is prima fascia evidence of civilization crumbling.

There is no oil involved in the Horn. So to you cynics out there, understand that you too should see this as an opportunity for America to work on principle. Or are you romanced by piracy?

February 21, 2011

Business Insider says, “If you had to sum up the education bubble in one misconception, it might be: ‘The average 22-year-old is a good credit risk for $150,000 in debt, collateralized by something completely intangible.’”

THE PRESIDENT: Klaus, thank you very much. Thanks for inviting me. Klaus said, it's about time you showed up.Proud to be here. Laura and I are so honored that, Klaus, you gave us a chance to come. I do want to thank President Mubarak and Mrs. Mubarak for their wonderful hospitality. I want to thank the members of Congress who are here. I appreciate the heads of state who have joined us. I thank the foreign ministers who are here,including my own, Secretary of State Condoleezza Rice. And I want to thank the members of the Diplomatic Corps.

Laura and I are delighted to be in Egypt, and we bring the warm wishes of the American people. We're proud of our long friendship with your citizens. We respect your remarkable history. And we're humbled to walk in the ancient land of pharaohs, where a great civilization took root and wrote some of the first chapters in the epicstory of humanity. America is a much younger nation, but we've made our mark byadvancing ideals as old as the pyramids. Those ideals of liberty and justice have sparked a revolution across much of the world. This hopeful movement made its way to places where dictators oncereigned and peaceful democracies seemed unimaginable: places like Chile and Indonesia and Poland and the Philippines and SouthKorea. These nations have different histories and different traditions.Yet each made the same democratic transition, and they did it on their own terms. In these countries, millions every year are rising frompoverty. Women are realizing overdue opportunities. And people offaith are finding the blessing of worshiping God in peace.

All these changes took place in the second half of the 20th century. I strongly believe that if leaders like those of you in this room act with vision and resolve, the first half of 21st century can be the time when similar advances reach the Middle East. This region is home to energetic people, a powerful spirit of enterprise, and tremendous resources. It is capable of a very bright future -- a future in which the Middle East is a place of innovation and discovery, driven by free men and women.In recent years, we've seen hopeful beginnings toward this vision. Turkey, a nation with a majority Muslim population, is a prosperous modern democracy. Afghanistan under the leadership of President Karzai is overcoming the Taliban and building a free society. Iraq under the leadership of Prime Minister Maliki is establishing a multi-ethnic democracy. We have seen the stirrings of reform from Morocco and Algeria to Jordan and the Gulf States. And isolation from the outside world is being overcome by the most democratic of innovations: the cell phone and the Internet. America appreciates the challenges facing the Middle East. Yet the light of liberty is beginning to shine.

There is much to do to build on this momentum. From diversifying your economies, to investing in your people, to extending the reach of freedom, nations across the region have an opportunity to move forward with bold and confident reforms -- and lead the Middle East to its rightful place as a center of progress and achievement. Taking your place as a center of progress and achievement requires economic reform. This is a time of strength for many of your nations' economies. Since 2004, economic growth in the region has averaged more than 5percent. Trade has expanded significantly. Technology has advanced rapidly. Foreign investment has increased dramatically. And unemployment rates have decreased in many nations. Egypt, for example, has posted strong economic growth, developed some of the world's fastest growing telecommunications companies, and made major investments that will boost tourism and trade. In order for this economic progress to result in permanent prosperity and an Egypt that reaches its full potential, however, economic reform must be accompanied by political reform. And I continue to hope that Egypt can lead the region in political reform.

This is also a time to prepare for the economic changes ahead. Rising price of oil has brought great wealth to some in this region, but the supply of oil is limited, and nations like mine are aggressively developing alternatives to oil. Over time, as the world becomes less dependent on oil, nations in the Middle East will have to build more diverse and more dynamic economies.

Your greatest asset in this quest is the entrepreneurial spirit of your people. The best way to take advantage of that spirit is to make reforms that unleash individual creativity and innovation. Your economies will be more vibrant when citizens who dream of starting their own companies can do so quickly, without high regulatory and registration costs. Your economies will be more dynamic when property rights are protected and risk-taking is encouraged -- not punished -- by law. Your economies will be more resilient when you adopt modern agricultural techniques that make farmers more productive and the food supply more secure. And your economies will have greater long-term prosperity when taxes are low and all your citizens know that their innovation and hard work will be rewarded.

One of the most powerful drivers of economic growth is free trade. So nations in this region would benefit greatly from breaking down barriers to trade with each other. And America will continue working to open up trade at every level. In recent years, the United States has completed free trade agreements with Jordan, Oman, Morocco, and Bahrain. America will continue to negotiate bilateral free trade agreements in the region. We strongly supported Saudi Arabia's accession to the World Trade Organization, and we will continue to support nations making the reforms necessary to join the institutions of a global economy. To break down trade barriers and ignite economic growth around the world, we will work tirelessly for a successful outcome to the Doha Round this year.

As we seek to open new markets abroad, America will keep our markets open at home. There are voices in my country that urge America to adopt measures that would isolate us from the global economy. I firmly reject these calls for protectionism. We will continue to welcome foreign investment and trade. And the United States of America will stay open for business.

Taking your place as a center of progress and achievement requires investing in your people. Some analysts believe the Middle East and North Africa will need to create up to 100 million new jobs over the next 10 to 15years just to keep up with population growth. The key to realizing this goal is an educated workforce.

This starts early on, with primary schools that teach basic skills, such as reading and math, rather than indoctrinating children with ideologies of hatred. An educated workforce also requires good high schools and universities, where students are exposed to a variety of ideas, learn to think for themselves, and develop the capacity to innovate. Not long ago the region marked a hopeful milestone in higher education. In our meeting yesterday, President Karzai told me he recently handed out diplomas to university graduates, including 300 degrees in medicine, and a hundred degrees in engineering, and a lot of degrees to lawyers, and many of the recipients were women. (Applause.)

People of the Middle East can count on the United States to be a strong partner in improving your educational systems. We are sponsoring training programs for teachers and administrators in nations like Jordan and Morocco and Lebanon. We sponsored English language programs where students can go for intensive language instruction. We have translated more than 80 children's books into Arabic. And we have developed new online curricula for students from kindergarten through high school.

It is also in America's interest to continue welcoming aspiring young adults from this region for higher education to the United States. There were understandable concerns about student visas after 9/11. My administration has worked hard to improve the visa process. And I'm pleased to report that we are issuing a growing numbers of student visas to young people from the Middle East. And that's the way it should be. And we'll continue to work to expand educational exchanges, because we benefit from the contribution of foreign students who study in America because we're proud to train the world's leaders of tomorrow and because we know there is no better antidote to the propaganda of our enemies than firsthand experience with life in the United States of America.Building powerful economies also requires expanding the role of women in society. This is a matter of morality and of basic math. No nation that cuts off half its population from opportunities will be as productive or prosperous as it could be. Women are a formidable force, as I have seen in my own family -- (laughter and applause) -- and my own administration. (Applause.) As the nations of the Middle East open up their laws and their societies towomen, they are learning the same thing.

I applaud Egypt. Egypt is a model for the development of professional women. In Afghanistan, girls who wereonce denied even a basic education are now going to school, and a whole generation of Afghans will grow up withthe intellectual tools to lead their nation toward prosperity. In Iraq and Kuwait, women are joining political partiesand running campaigns and serving in public office. In some Gulf States, women entrepreneurs are making aliving and a name for themselves in the business world.

Recently, I learned of a woman in Bahrain who owns her own shipping company. She started with a small officeand two employees. When she first tried to register her business in her own name, she was turned down. Sheattended a business training class and was the only woman to participate. And when she applied for a customslicense, officials expressed surprise because no woman had ever asked for one before. And yet with hard work and determination, she turned her small company into a $2 million enterprise. And this year, Huda Janahi was named one of the 50 most powerful businesswomen in the Arab world. (Applause.) Huda is an inspiring example for the whole region. And America's message to other women in the Middle East is this:You have a great deal to contribute, you should have a strong voice in leading your countries, and my nation looks to the day when you have the rights and privileges you deserve.

Taking your place as a center of progress and achievement requires extending the reach of freedom. Expanding freedom is vital to turning temporary wealth into lasting prosperity. Free societies stimulate competition in the marketplace. Free societies give people access to information they need to make informed and responsible decisions. And free societies give citizens the rule of law, which exposes corruption and builds confidence in the future.

Freedom is also the basis for a democratic system of government, which is the only fair and just ordering of society and the only way to guarantee the God-given rights of all people. Democracies do not take the same shape; they develop at different speeds and in different ways, and they reflect the unique cultures and traditions of their people. There are skeptics about democracy in this part of the world, I understand that. But as more people in the Middle East gain firsthand experience from freedom, many of the arguments against democracy are being discredited.

For example, some say that democracy is a Western value that America seeks to impose on unwilling citizens.This is a condescending form of moral relativism. The truth is that freedom is a universal right -- the Almighty's gift to every man, woman, and child on the face of Earth. And as we've seen time and time again, when people areallowed to make a choice between freedom and the alternative, they choose freedom. In Afghanistan, 8 millionpeople defied the terrorist threats to vote for a democratic President. In Iraq, 12 million people waved ink-stainedfingers to celebrate the first democratic election in decades. And in a recent survey of the Muslim world, there was overwhelming support for one of the central tenets of democracy, freedom of speech: 99 percent in Lebanon, 94 percent here in Egypt, and 92 percent in Iran.

There are people who claim that democracy is incompatible with Islam. But the truth is that democracies, by definition, make a place for people of religious belief. America is one of the most -- is one of the world's leading democracies, and we're also one of the most religious nations in the world. More than three-quarters of our citizens believe in a higher power. Millions worship every week and pray every day. And they do so without fear of reprisal from the state. In our democracy, we would never punish a person for owning a Koran. We would never issue a death sentence to someone for converting to Islam. Democracy does not threaten Islam or any religion.Democracy is the only system of government that guarantees their protection.

Some say any state that holds an election is a democracy. But true democracy requires vigorous political partiesallowed to engage in free and lively debate. True democracy requires the establishment of civic institutions thatensure an election's legitimacy and hold leaders accountable. And true democracy requires competitive electionsin which opposition candidates are allowed to campaign without fear or intimidation.

Too often in the Middle East, politics has consisted of one leader in power and the opposition in jail. America isdeeply concerned about the plight of political prisoners in this region, as well as democratic activists who areintimidated or repressed, newspapers and civil society organizations that are shut down, and dissidents whosevoices are stifled. The time has come for nations across the Middle East to abandon these practices, and treattheir people with dignity and the respect they deserve. I call on all nations to release their prisoners of conscience,open up their political debate, and trust their people to chart their future. (Applause.)

The vision I have outlined today is shared by many in this region -- but unfortunately, there are some spoilers whostand in the way. Terrorist organizations and their state sponsors know they cannot survive in a free society, so they create chaos and take innocent lives in an effort to stop democracy from taking root. They are on the wrongside in a great ideological struggle -- and every nation committed to freedom and progress in the Middle Eastmust stand together to defeat them.

We must stand with the Palestinian people, who have suffered for decades and earned the right to be a homeland of their own -- have a homeland of their own. I strongly support a two-state solution -- a democratic Palestine based on law and justice that will live with peace and security alongside a democrat Israel. I believe that thePalestinian people will build a thriving democracy in which entrepreneurs pursue their dreams, and families own their homes in lively communities, and young people grow up with hope in the future.

Last year at Annapolis, we made a hopeful beginning toward a peace negotiation that will outline what this nation of Palestine will look like -- a contiguous state where Palestinians live in prosperity and dignity. A peace agreement is in the Palestinians' interests, it is in Israel's interests, it is in Arab states' interests, and it is in the world's interests. And I firmly believe that with leadership and courage, we can reach that peace agreement this year. (Applause.)

This is a demanding task. It requires action on all sides. Palestinians must fight terror and continue to build the institutions of a free and peaceful society. Israel must make tough sacrifices for peace and ease the restriction son the Palestinians. Arab states, especially oil-rich nations, must seize this opportunity to invest aggressively in the Palestinian people and to move past their old resentments against Israel. And all nations in the region must stand together in confronting Hamas, which is attempting to undermine efforts at peace with acts of terror and violence.

We must stand with the people of Lebanon in their struggle to build a sovereign and independent democracy. This means opposing Hezbollah terrorists, funded by Iran, who recently revealed their true intentions by taking up arms against the Lebanese people. It is now clearer than ever that Hezbollah militias are the enemy of a freeLebanon -- and all nations, especially neighbors in the region, have an interest to help the Lebanese people prevail. (Applause.)

We must stand with the people of Iraq and Afghanistan and other nations in the region fighting against al Qaeda and other extremists. Bin Laden and his followers have made clear that anyone who does not share their extremist ideology is fit for murder. That means every government in the Middle East is a target of al Qaeda. And America is a target too. And together, we will confront and we will defeat this threat to civilization.We must stand with the good and decent people of Iran and Syria, who deserve so much better than the life they have today. Every peaceful nation in the region has an interest in stopping these nations from supporting terrorism. And every peaceful nation in the region has an interest in opposing Iran's nuclear weapons ambitions.To allow the world's leading sponsor of terror to gain the world's deadliest weapon would be an unforgivable betrayal of future generations. For the sake of peace, the world must not allow Iran to have a nuclear weapon.(Applause.)

The changes I have discussed today will not come easily -- change never does. But the reform movement in the Middle East has a powerful engine: demographics. Sixty percent of the population is under 30 years old. Many of these young people surf the web, own cell phones, have satellite televisions. They have access to unprecedented amounts of information. They see what freedom has brought to millions of others and contrast that to what they have at home.

Today, I have a message for these young people: Some tell -- some will tell you change is impossible, but historyhas a way of surprising us, and change can happen more quickly than we expect. In the past century, one concept has transcended borders, cultures, and languages. In Arabic, "hurriyya" -- in English, "freedom." Across the world, the call for freedom lives in our hearts, endures in our prayers, and joins humanity as one.I know these are trying times, but the future is in your hands -- and freedom and peace are within your grasp. Just imagine what this region could look like in 60 years. The Palestinian people will have the homeland they have long dreamed of and deserve -- a democratic state that is governed by law, respects human rights, and rejects terror. Israel will be celebrating its 120 anniversary as one of the world's great democracies -- a secure and flourishing homeland for the Jewish people.From Cairo, Riyadh, Baghdad to Beirut, people will live in free and independent societies, where a desire for peace is reinforced by ties of diplomacy and tourism and trade. Iran and Syria will be peaceful nations, where today's oppression is a distant memory and people are free to speak their minds and develop their talents. AlQaeda, Hezbollah, and Hamas will be defeated, as Muslims across the region recognize the emptiness of the terrorists' vision and the injustice of their cause.

This vision is the same one I outlined in my address to the Israeli Knesset. Yet it's not a Jewish vision or a Muslim vision, not an American vision or an Arab vision. It is a universal vision, based on the timeless principles of dignity and tolerance and justice -- and it unites all who yearn for freedom and peace in this ancient land.

Realizing this vision will not be easy. It will take time, and sacrifice, and resolve. Yet there is no doubt in my mind that you are up to the challenge -- and with your ingenuity and your enterprise and your courage, this historic vision for the Middle East will be realized. May God be with you on the journey, and the United States of America always will be at your side.Thank you for having me.

January 28, 2011

Somebody said that Obama sounds like a college professor. Exactly. Which is why in the end I kinda had to stop listening. I find it quite difficult to find anything approaching much more than good sounding ideas that get squashed like bugs when they meet the real world and so he grabs sledgehammer style armtwisting power and makes a hash of what might have been good policy. Then like Spence says, he compromises his way out, cursing the devil in his loyal opposition and saying the best that could possibly be done has been done. That's the pattern.

I didn't hear a bad idea, not one, in all the time I listened. I just don't believe he can really do much very well. And what characterizes it for me were two things. 1. He wants to get rid of loopholes in the corporate tax code and reduce to a flatter lower corporate tax. 2. He went to some obscure place in the midwest to say he was going to spend a couple hundred million on some worthy cause. The second is obviously pandering, and with no real money to speak of. The first is impossible to do in two years without more of the same, professor.

I'm starting to think that at long last we have got our William Jennings Bryan / Adlai Stevenson President. All the leadership of a college town department egghead. All his drama is gone. He talked about high speed trains, fer chrissake. Didn't we hear that Donald Fagen song in 1982?

(Sigh)

It's a good thing I don't care about politics much. I'd be pretty bummed out right about now. I'm just waiting for the drama of chance. Did you hear there might be cold fusion? Did you hear Yemen and Tunisia might collapse? And why doesn't somebody just shoot Hosni Mubarak? I'm sick of his old ass. Meh. I'm listening to Hardcore History again, Rome, Nazis. Nothing contemporary has the shock and awe. Maybe Rand Paul is actually worth listening to.

OK I promised I'd be serious. But if the President is serious about taking loopholes out of the tax code, how does he expect to incent businesses to do anything? Is he just going to write executive order-style regulation like he tried with Wall Street compensation? Rule by fiat instead of incent with tax breaks? Really?

January 09, 2011

It never ceases to amaze me how certain old hacked arguments serve as fundamental excuses to do or say more than the the consequence bears. To me in the end it all represents nothing much more than uneconomic thinking - a kind of rationality that appreciates reason, but cannot stand the fact that everything isn't always reasonable. It is, I imagine, at the very least some measure of healthy hope and faith in mankind, but often more resembles religious devotion of the intolerant sort.

There are two arguments I have in mind at the moment, the first being oddly placed as a point against today's Republicans. This is that the fact that slaves held in America were counted as 3/5 of a person indicates a fundamental flaw with the Constitution. I don't really mean to go much into that debate, but I have recently been reminded that the Bill of Rights was not ratified until the end of 1791. That was two years after the Constitution itself was adopted, superceding the Articles of Confederation which had been authored in 1777 and enacted in 1781. So the very essence of what we consider our freedom, the right of free speech, our First Amendment right wasn't manifest until 15 and a half years after the beginning of the Revolution, a violent rebellion which itself could be counted as begun with the murder of Attucks in 1770.

Did it take 21 years for America to recognize the right of free speech? No. It took the process that long to officially ratify that which they held in their hearts for all that time.

But the central argument I wish to counter is the idea that American consumption make us immoral when it in fact employs the world. You should by now be familiar with the anti-American syllogism which begins, America has only 5% of the world's population but consumes... and then some multiple of that 5% and the subsequent admonishments for us to cut back, repent and beg the global south for forgiveness. Except that the global south are doing their best to supply us with what we desire, and so earn their fortunes.

That is the sum essence of my argument, easily refutable if one cares to I imagine. But it does honestly puzzle me to determine how the American standard of living does such presumed damage to the standards of living elsewhere on the planet. I've paid attention to one commodity it can be said we rather hoard and gulp at absurd volumes and that is chocolate. You'll scarcely find any American who is abashed by their desire and few who would think that giving up chocolate will 'save the planet' and 'help the developing world'. But there is no other crop I can think of whose production is more worthy of the sorts of environmentalist alarms we hear applied to all of our 'excess' appetites. World cocoa production is an increasingly expensive proposition, supply struggles to meet demand, comes from Third World countries like Cote DIvoire and Cameroon, is controlled by wealthy families with names like Ghirardelli, Mars and Hershey and multinational conglomerates like Nestle. What's not to protest?

But if Americans suddenly stopped eating chocolate, would they stop being so 'evil'? If Americans stopped buying second cars or expensive cell phones or different clothing for every season of the year, who would be better off? If Nike stopped making shoes in China, what would those Chinese do? Who is going to pay to re-educate the shoe factory worker? Who is going to find out what Americans are going to buy so much of next that it employs people on the other side of the globe?

I am often amazed at the arrangements that make it possible to build something made from raw materials in one country, assembled in another and shipped as product to a third. Yes, a preponderance of that global traffic ends up at Walmart, Sears and Target. There's surely a pile of it here in my house. I'm affluent. I buy stuff I want but don't need. I'm upper middle class. I signify about the brand and the quality rather than be satified by the function. I'm wasteful. I replace rather than repair. This is a cultural thing. It generates surplus work. I certainly could save, I could stop my conspicuous and constant consumption of multiple streams of household goods and services. I could go downscale, and often plan ways to do so. But I'll take down a lot of folks with me, and so would you if you stopped buying.

The difference between December and January in the IT business is often budgetary and often holiday related, both are cultural. They way people buy consulting services up in the domain where we bill like surgeons and attorneys often depends on conventions of lumping several hundreds of thousands of dollars together into non-trivial decision packages for funding projects. The demand is out there but the supply waits for the word 'go'. It's more reliable than fishing, but just as frustrating. There is nothing, and then within a week or two, there is everything all at once. We all wait for demand to speak up. We watch with anticipatory fever as it digs into its pocket and produces the moola. We sit around by the phone waiting for his minions to tell us when he's ready to bargain with us for what we do. We stand on the corner waiting to flag him down.

But what if he decides to just stay home and watch TV? What if he decides to sit on his zillions and just play golf with his friends instead of fund our fabulous idea? What if he decides that he's trying to cut down all the time we've been learning to bake cake?

Human appetites are predictable. What do we want? We want everything and we want more of it. We demand. And in demanding, we create reasons for others (who are ourselves) to make themselves useful. In the honest exchange is a circle of life. It is economical. It goes to the core of why we do things, the choices we make and our convoluted decisions. Our demands are real, and they form the essence of human necessity. It is the call that cannot be ignored and the service that cannot be refused. It is our way to satisfaction. It cannot be arbitrarily branded as evil simply because of the fractions of who demands and who supplies and from whence these human actions come. The only righteousness supply and demand require is an honest exchange and a fair price.